Sibling rivalry threatens MTN-Reliance deal

Lynnette Luna — Mon, 16 Jun 2008 12:16:44 -0400

The proposed takeover of mobile operator Reliance Communications by South Africa's MTN is in danger of moving to the courts as India's billionaire Ambani brothers fight over the terms. Mukesh Ambani, through his group Reliance Industries, warned that he would block the planned merger by claiming a right of first refusal over Reliance Communications, the company owned by his brother Anil Ambani.

Mukesh Ambani has threatened to sue MTN and Reliance Communications for damages if the deal moves ahead. Anil Ambani's group has responded with legal threats of its own.

"If Reliance Industries chooses to take any legal action, the same will be vigorously defended by Reliance Communications and Reliance Communications will claim costs and damages from Reliance Industries," the company said.

In May, Reliance and MTN announced an agreement on a reverse takeover that would see Reliance make a bid for MTN, but MTN would end up with control of Reliance. MTN has a market value of about $40 billion. Reliance is valued at just below $30 billion.

For more:
- read the Financial Times

Related story:
MTN and Reliance could form mobile-phone powerhouse. MTN story

MTN and Reliance could form mobile-phone powerhouse

Lynnette Luna — Wed, 28 May 2008 11:31:20 -0400

After a deal worth an estimated $50 billion between India's Bharti Airtel and South African MTN group hit the rocks over the weekend, reports are surfacing today that MTN and India's Reliance Communications are reportedly working on a deal that will result in MTN acquiring the Indian company's mobile-phone operations. According to the Wall Street Journal, the two companies have preliminarily agreed on a reverse takeover that would see Reliance make a bid for MTN, but MTN would end up with control of Reliance. MTN has a market value of about $40 billion. Reliance is valued at just below $30 billion.

The deal with Bharti Airtel reportedly fell apart when MTN decided it wanted to take over Bharti Airtel rather than be acquired by the Indian company. Bharti Airtel quickly called off negotiations, saying BA shareholders would have been hurt by the deal that "would not capture the synergies of a combined entity."

Bharti officials had planned to use the acquisition--its first major move outside India--to springboard the company from an Indian company into a multinational one.

If a deal with Reliance works for MTN, it will create a mobile operator with a market value similar to that of Japan's NTT DoCoMo and a customer base that would span Africa, the Middle East and south Asia, all major mobile growth engines. MTN has 68.2 million subscribers and Reliance has 48 million.

For more about a possible MTN-Reliance deal:
- check out this article from the Wall Street Journal (WSJ sub. req.)

Related stories:
$50 billion Bharti Airtel/MTN deal bites the dust. See this Bharti Airtel, MTN story
MTN left with single bidder, Vodafone goes own direction. See this MTN report
Rumor Mill: Who's bidding for South Africa's MTN? See this Bharti story