Mumbai: South African telecom firm MTN Group may walk out of a deal with Reliance Communications amidst an ongoing dispute between the Ambani brothers – Mukesh and Anil – over the MTN stake.
Anil Dhirubhai Ambani Group (ADAG) firm Reliance Communications began talks with South African telecom firm MTN about a tie-up in May. The talks have since taken a new turn and could now lead to a reverse takeover of Reliance Communications with its chairman Anil Ambani becoming the biggest shareholder in MTN.
Even as the two sides are discussing a business combination, the Mukesh Ambani-led Reliance Industries has staked a right of first refusal on Reliance Communications shares.
Reliance Communications maintains the claim is untenable but it agreed to meet Reliance Industries next week ''to clarify any doubts."
The meeting is not part of "conciliation" or "dispute resolution,'' asserts Reliance Communications.
Reliance Industries had called a meeting of Reliance Communications officials on Monday to sort out matters but said the latter refused to co-operate. Reliance Industries now plan to ''adopt appropriate proceedings against Reliance Communications, as advised."
Reliance Comm has now written to RIL agreeing to meet next week, but RIL, in turn, has spurned the offer and has threatened legal action.
RIL said is was left with no choice but to adopt appropriate proceedings against R-Comm. It also blasted R-Comm for misleading the media.
Reliance Comm maintains that RIL's sole objective is to derail talks with MTN and frustrate a possible combination with MTN.
MTN and Reliance Communications started talks on 26 May for a 45-day exclusivity period, which got over on 8 July. Reliance Communications was reported to get 20 per cent fresh equity in MTN in a private placement of shares.
Reliance Comm sources say the talks with MTN could be extended by at least another 2-3 weeks. MTN, however, said they will update their shareholders and make an announcement tomorrow, when the Johannesburg Stock Exchange opens.
MTN may be looking at direct sale of stake to Reliance Communications to ward off a potential legal challenge. There is, however, no conformation of this possibility.