MTN eyes 74 per cent in RComm in stock-and-cash deal

Phuthuma Nhleko, group president and CEO, MTNMumbai: Anil Dhirubhai Ambani's Group (ADAG) firm Reliance Communications is looking at a complex marriage with its South African suitor MTN. Anil Ambani also seems to be ready to pay a ''significant premium'' to win effective boardroom control of MTN.

The the two companies are actually discussing a merger than an MTN takeover of Reliance Communications.

A report in The Economic Times said Reliance Communications is looking at the possibility of giving MTN a 74 per cent stake, as part of a cash-and-stock deal. Current Indian regulations limit foreign holding in Indian telecommunication companies to 74 per cent.

Anil Ambani's ADAG holds 66 per cent in Rcom, while another 11 per cent is held by overseas investors. A combined MTN-Rcom entity, would upset the order of the top 10 global telecommunication firms. MTN is valued at $35 billion, and Rcom at $27 billion.

The combined entity would rival Japan's NTT DoCoMo Inc in market value, and in terms of subscribers it would slip into the list just under Deutsche Telekom, at number seven. It would also make Anil Ambani the single largest shareholder in MTN, and make Rcom its subsidiary.

A day ago, the FT Alphaville website had carried a report indicating that Rcom would be inclined to pay ''a significant premium'' for control of MTN, listing out the two options for a possible deal as either a straightforward cash and shares bid for MTN from Rcom, or MTN retaining its South African nationality with Anil Ambani buying in 34.9 per cent of the company.