Saturday, July 19, 2008

MTN drops talks with Reliance Communications

Plans by South African mobile giant MTN to expand into India have been scuppered for a second time after the company announced here Friday evening that its extended talks with Reliance Communications have been ended.
In a short statement via the Johannesburg Securities Exchange (JSE), MTN said it had been mutually decided to allow the exclusivity agreement to lapse.
Before it entered into a 45-day exclusivity discussion with Reliance, which was extended for a fortnight that would have ended this coming Wednesday, MTN had also caused great excitement in the market when it announced talks with Bharti Airtel three months ago.
The latest statement, which is a regulatory requirement of the JSE, was intended to advise MTN shareholders that earlier cautionaries were withdrawn: "Shareholders are referred to the announcements released on 26 May and 9 July 2008 with regard to exclusive negotiations relating to a potential business combination between MTN and Reliance Communications Limited. Owing to certain legal and regulatory issues, the parties are unable to conclude a transaction."
Although there was no clarity on what the regulatory impediments were, the legal battle between the Ambani brothers, Anil of Reliance Communications and Mukesh of Reliance Industries, is believed to have been the final straw that led to MTN's decision.
The dispute between the Ambani brothers could lead to court proceedings that would drag on for a long period, promoting views here that it could have hampered MTN's ambitions in India.

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