Reliance Communications Starts Exclusive Discussions With Mtn

[Honest 836]

RIL again writes to RCOM, MTN; seeks talks before arbitration

3 Jul, 2008, 2200 hrs IST, PTI

NEW DELHI: The fight between the Ambani siblings flared up, with Mukesh Ambani-led RIL on Thursday shooting off another letter to RCOM and MTN, who are negotiating a $70 billion merger deal, invoking non-compete agreement.

"RIL has invoked the provisions of dispute resolution contained in the non-competition agreement dated January 12, 2006, and has invited RCOM to participate in the process of mutual conciliation prior to commencement of formal arbitration," an RIL spokesperson said.

Reacting to the latest RIL missive, an RCOM spokesperson said: "The second letter from RIL is a sign of desperation and frustration."

The latest RIL communication, a follow up of the letter asserting its Right of First Refusal on majority stake in RCOM, could put up another obstacle in the ongoing negotiations between the South African and Indian firms.

An MTN spokesperson from Johannesburg, however, declined to comment on the communication, as also on reports that it is extending the exclusivity agreement for negotiation with RCOM.

[Honest 836]

MTN may walk out of RCOM deal if Ambani feud continues: Report

3 Jul, 2008, 2215 hrs IST, PTI

JOHANNESBURG: MTN's tolerance may be running out for a possible $70-billion deal with Anil Ambani-led Reliance Communication, with local media speculating that the South African telecom major's CEO may walk out if the dispute between the Ambani brothers is not settled soon.

"MTN is an operator with a low tolerance level. It comes from the top, with CEO Phuthuma Nhleko handing out brusque replies if someone poses a question he thinks is gormless," a media report said on Thursday.

While noting that elder Ambani sibling Mukesh-led Reliance Industries' claim to first right of refusal to sale of a stake in RCOM is threatening to sink a deal between RCOM and MTN, the report said that "the validity of the claim may never be tested, as there's a high chance MTN's tolerance threshold will expire first."

"The no-nonsense attitude was also displayed in Benin, when the government tried to extract $52 million in spurious backdated fees to let MTN keep operating. Nhleko silenced the network for two months rather than capitulate. His gamble paid off, with President Thabo Mbeki persuading Benin to ease those demands," the report said.

The report further said that the "lesson is never play poker with Phuthuma and his henchmen. Which is almost what India's warring Ambani brothers are doing."

The report noted that "Nhleko will have little patience in dealing with two brothers whose egos are as big as their businesses. Particularly when MTN is a third party caught in the crossfire of an undignified sibling squabble.

"Negotiating around a family feud that threatens to sink a serious business deal is not his idea of how to play. It would be no surprise if Nhleko calls their bluff and pushes his chair away from the table."

[Honest 836]

RIL, RCOM in war of words, again

4 Jul, 2008, 0105 hrs IST

MUMBAI: Mukesh Ambani’s Reliance Industries (RIL) on Thursday shot off another letter to Reliance Communications (RCOM), the telecommunications company run by brother Anil Ambani, invoking a right of first refusal (RoFR).

A copy of the letter was also sent to South African telco MTN with which RCOM is negotiating a deal, the exact contours of which are not yet clear.

In a brief media statement, RIL said on Thursday evening: “RIL has invoked the provisions of the dispute resolution contained in the non-competition agreement dated January 12, 2006 and has invited RCOM to participate in the process of mutual conciliation prior to commencement of formal arbitration.” RCOM, in its response, strongly criticised the RIL move.

The RCOM spokesperson said: “The alleged right of RoFR is not relevant under the structure being discussed. In addition to being legally untenable, it is a sign of RIL’s growing desperation and frustration.”

Sources in RIL said the letter was written in line with the January 2006 agreement between the Ambani brothers. “The agreement required RIL to inform the other party a month before going into arbitration.”

A fortnight ago, RIL had sent a letter to MTN claiming its RoFR in RCOM.

RCOM vehemently denies any such right. However, RIL sources said the company had not received any response from RCOM. Sources close to RIL said both parties had agreed on the RoFR while separating their businesses.

The bone of contention is the RoFR, which is part of the January 2006 agreement signed by RIL and four entities of ADAG to implement the demerger of the Reliance group. The brothers arrived at a separation formula in June 2005 after a prolonged and bitter battle.

The first letter was sent by RIL after it was reported in the media that RCOM was trying to strike a reverse merger with MTN. Under that structure, it was proposed that MTN would become the holding company of RCOM while the Anil Dhirubhai Ambani Group — promoters of RCOM — would emerge as the single largest shareholder of MTN.

RCOM is learnt to be working on a separate structure to ensure that the so-called RoFR is not triggered. It is learnt that RCOM could directly buy a controlling stake in MTN, possibly in association with a Middle East-based sovereign wealth fund.

RCOM and an investment company of ADAG has filed caveats in the Bombay High Court, to ensure that no ex-parte order was issued in case RIL attempts to enforce its claimed RoFR in case a deal with MTN happens.

[@ksh@T 20]

RCOM plans to raise $5 bn for MTN deal

MUMBAI: Anil Ambani’s Reliance Communications (RCOM) is in talks to raise up to $5-6 billion from banks to part-finance its planned acquisition of the South African telco MTN. RCOM may pledge the shares of MTN to raise the funds and also provide some sort of guarantee to the lenders.

Sources in the know said Deustsche Bank, HSBC and Barclays, among others, are putting in place short-term financing for RCOM to finance the deal. A few Indian banks and a host of European banks have also offered an underlying commitment to lend money for the transaction. RCOM will have to repay this debt in a year or so by raising long-term funding.

RCOM’s 45-day exclusivity period (during which MTN could not consider any alternative partner) ends on July 7. It’s unlikely that the transaction would be completed by then, said a source in the know. Instead, the exclusivity period might be extended.

The entire transaction is expected to be routed through a special purpose vehicle (SPV). In addition to RCOM, other partners could also pick up equity in this SPV. RCOM is learnt to have been in talks with a Middle East-based sovereign wealth fund and a couple of private equity players to offer stake in the SPV.

It is learnt that the private equity funds are not-so-keen to participate in the SPV, while the sovereign fund is interested in it. RCOM will likely hold a majority equity stake in the SPV.

Sources said the other equity holders of the SPV are expected to chip in around $4 billion. Given MTN’s current valuation of nearly $28 billion, a deal is expected to be done at a valuation of around $35 billion, assuming a 20% premium. This means, the SPV may need to pay around $11-12 billion for a 35% stake.

Given the other equity holder’s contribution of $4 billion, RCOM will have to chip in around $7 billion to $8 billion. This is likely to be funded by a mixture of internal accruals and debt. The exact amount of debt depends on the amount of equity which RCOM is willing to put in. The acquisition cost will go up if RCOM is allowed to hike its stake further to 40%. Both the parties are yet to arrive at the exact deal size which would depend on the premium, sources said.

The SPV will directly acquire a shade below 35% in MTN, the maximum permissible limit in South Africa without triggering a tender offer. Then RCOM will look at a ‘whitewash procedure’ under which MTN shareholders will be asked to vote to waive their right to a tender offer. If the shareholders agree, RCOM/SPV will scale up its stake to 40%. Otherwise, it will be content with a shade below 35% stake in MTN.

Sources said RCOM is also examining the possibility of offering preference shares to the investors who will be picking up a stake in the SPV. However, the investors are more interested in having a direct equity in SPV. “Talks between both the parties to sort out the nitty-gritty are going on,” said a source.

This new structure is a sharp departure from the reverse merger route which was earlier discussed by the two companies. Under the reverse merger route, MTN would become the holding company of RCOM although Anil Dhirubhai Ambani Group — RCOM’s promoters — would have become the single largest shareholder of the Johannesburg-based telco. The deal was designed to be consummated through an open offer by MTN for the RCOM shareholders and swapping of ADAG’s shares in RCOM for MTN shares.

However, the possibility of a prolonged legal dispute may have stymied the reverse merger structure as Mukesh Ambani’s Reliance Industries interprets this as a ‘sale’ of RCOM and may claim its right of first refusal in RCOM. Citing an agreement which was signed between Reliance Industries and three entities of ADAG, Reliance Industries had written letters to MTN and its investment banks, claiming that it enjoys a right of first refusal in case RCOM is sold. ADAG vehemently denies any such right is enjoyed by Reliance Industries. On Thursday a second letter from RIL to RCOM and MTN sparked off another war of words between RIL and RCOM.

The new structure ensures RCOM would buy the controlling stake in MTN directly, which would ensure the right of first refusal cannot be revoked. But RCOM cannot leverage the balance sheet of MTN to finance the transaction as a 35-40% stake in the foreign company would not allow it to do so. MTN will not be part of the consolidated balance sheet of RCOM.

Bankers said funding a big ticket deal could become a problem in the wake of tight liquidity conditions across the globe. Spreads of Indian papers have moved up by around 28 to 30 basis points in the past couple of weeks. The six-month Libor is currently at around 3.13%. The credit default swaps for RCOM is now at around 325 bps. They also said that there are very few debt deals in the market and most of the deals are being done on a bilateral basis.

The RCOM stock on Thursday slipped 6.91% to close at Rs 389.50, putting the valuation of the company at $18 billion.

ADAG seeks probe into RCOM share slide; says RIL desperate

NEW DELHI: The Anil Ambani group on Friday asked market regulator SEBI to probe hammering down of shares of Reliance Communications and other companies by rivals and charged RIL with attempting to derail ongoing talks for a deal with South African telecom giant MTN.

The Anil Ambani group on Friday wrote a letter to SEBI seeking a probe into the dip in shares of RCOM, which had touched a 52-week low of Rs 381.05 on Thursday, ADAG sources said.

Comments from RIL, which had shot off a fresh letter to RCOM and MTN yesterday invoking the arbitration clause under the non-compete agreement with ADAG, could not be immediately obtained.

Sources said that ADAG has charged RIL with desperate attempts to derail discussions with MTN and also accused rival interests of market abuse to impact valuations.

"RIL has invoked the provisions of dispute resolution contained in the non-competition agreement dated January 12, 2006, and has invited RCOM to participate in the process of mutual conciliation prior to commencement of formal arbitration," RIL statement had said.

The second communication by RIL, after its first letter asserting right of first refusal on any stake sale, could cast a shadow on negotiations between MTN and RCOM, both of whom are seeking to extend the exclusivity agreement for talks for the deal.

ADAG has also said that RIL was undermining Anil's efforts to create a global telecom giant worth USD 70 billion with strong Indian roots by merging RCOM and MTN.

[vmsanghrajka 0]

Still even after 1 month.. Not a single report suggests clearly what is going to be the structure of the deal.. Reverse Merger or Buying a controlling stake.. But whatever might be the case, MTN deal looks positive for Reliance..

[Honest 836]

Reliance Communications, MTN may extend talks

7 Jul, 2008, 0757 hrs IST

PHILADELPHIA: South African mobile phone operator MTN Group Ltd and Reliance Communications Ltd may continue their tie-up talks beyond Tuesday's deadline, the Wall Street Journal reported on Sunday.

MTN and Reliance agreed in May to 45 days of exclusive negotiations to create a global 10 telecoms company, which end on Tuesday.

The companies may extend the talks by a few more weeks, the newspaper said in its website edition. An extension would give Reliance Communications' chairman Anil Ambani some time to try to resolve a claim of right of first refusal on the telecom's shares by his estranged brother Mukesh, who runs Reliance Industries, India's largest company.

MTN, sub-Saharan Africa's top mobile operator, is nervous about entering a deal with a legal cloud over it and has looked at ways to restructure a transaction, the newspaper said.

The discussions had initially focused on a takeover of Reliance by MTN, but now the companies are weighing the reverse -- a takeover of MTN by Reliance, the newspaper said.

MTN and Reliance could not be immediately reached for comment.

[CUPIDON 0]

MTN may quit Reliance talks: Report

Caught in the middle of the Indian billionaire Ambani siblings' feud, South African telecom giant MTN is mulling walking away from talks for a possible amalgamation with Anil Ambani-led Reliance Communications [Get Quote], a report said on Monday.

"South Africa's MTN is considering walking away from a tie-up with Reliance Communications of India because of fears, an acrimonious spat between the Indian telecom operator's owner and his brother could leave the deal open to legal action," UK daily Financial Times reported.

Quoting an unnamed person familiar with the talks as saying that MTN and RCOM could extend their exclusive talks for another two to three weeks after the 45-day period expires tomorrow, the report said, 'there is no indication that extra time alone would be sufficient to resolve the feud' between Anil and Mukesh Ambani.

The deal, if fructifies, could create a combined entity worth about $70-80 billion, which would be one the world's biggest emerging market telecom firm.

While MTN and RCOM are said to be working on various deal structures, the FT report said there were 'mounting fears' that 'none of the myriad deal structures under discussion would insulate the combined company from Mukesh's lawyers.'

MTN would have to get the legal assurances (from RCOM) that they are in a position to defend themselves against a move from Mukesh-led Reliance Industries [Get Quote], the report quoted Morgan Stanley's telecom analyst Sean Gardiner as saying.

The deal has been clouded under uncertainties since RIL claimed right of first refusal in any controlling stake in RCOM and wrote letters to MTN and RCOM threatening legal action if its rights were breached. However, these claims are being contested by the Anil Ambani group.

Source : Rediff.com

[Honest 836]

RCom may meet RIL over MTN deal

7 Jul, 2008, 1711 hrs IST

MUMBAI: Reliance Communications has offered to meet Reliance Industries, which has staked a right of first refusal on its shares, a source close to the development said a day before a deadline for its exclusive talks with South Africa's MTN Group ends.

The source said Reliance Communications maintained that Reliance Industries' claims were untenable, but said India's No. 2 mobile firm was prepared to meet with Reliance Industries in the week of July 14 "to clarify any doubts".

The meeting was not part of "conciliation" or "dispute resolution", the source said. Reliance Communications, India's No. 2 mobile operator, began exclusive talks with MTN, sub-Saharan Africa's top mobile operator, in end-May.

A deal would create a top-10 global telecoms firm with operations in about two dozen countries.

In June, Mukesh Ambani, who runs Reliance Industries and is the estranged older brother of Reliance Communications chairman Anil Ambani, had claimed a right of first refusal on Reliance Communications shares.

Shares in Reliance Communications ended Monday down 4.2 percent at Rs 419.80 in BSE that rose 0.5 percent.

[Honest 836]

RCOM spurns RIL's conciliation offer; seeks clarificatory meet

7 Jul, 2008, 1924 hrs IST, PTI

MUMBAI: Spurning a bid by Mukesh Ambani-led RIL to open conciliation talks on Monday, younger sibling Anil's RCOM instead proposed a 'clarificatory' meeting next week as the estranged brothers continued their acrimony over the South African telecom giant MTN.

Following upon its offer to open talks for conciliation of their differences over RCOM's right to amalgamate MTN, an RIL team of financial and legal brass landed up at a five-star hotel here this morning. After sipping coffee during a hour- long wait for RCOM counterparts, the officials left.

RCOM officials explained the rebuff by saying, on condition of anonymity, that the company did not see any dispute that required conciliation.

Having made this legal tackle, RCOM thereafter proposed a meeting next week purely for the purpose of clarifications that RIL, which has claimed the first right of refusal on majority stake in RCOM, may seek.

The meeting would not constitute any conciliation or "dispute resolution" mechanism, RCOM officials said.

In its offer, which follows RIL last week invoking arbitration clause under the non-compete agreement and asking RCOM to start conciliation as part of the process, RCOM proposed to meet "RIL in week of 14th July to clarify any doubts".

Debunking RIL's claim of right of first refusal as "legally and factually untenable and misconceived, RCOM, whose exclusivity agreement with MTN for talks, is coming to end tomorrow, said the "meeting is not part of conciliation or dispute resolution mechanism".

RCOM sources said that neither there was any dispute nor occasion for conciliation process and said that communication to RIL makes it clear that the company reserved the rights to take all actions as legally advised.

[Honest 836]

RIL, RCOM exchange hate mails over MTN

8 Jul, 2008, 0408 hrs IST

MUMBAI/NEW DELHI: The war of letters between Anil Ambani’s Reliance Communications (RCOM) with Mukesh Amani’s Reliance Industries (RIL) is increasingly assuming ludicrous proportions. The media and public relations war escalated the day before RCOM’s 45-day exclusivity period for merger talks with the South African telco MTN expires on Tuesday.

MTN and RCOM are expected to update the stock exchanges on the status of their negotiations on Tuesday. The bone of contention this time was the minutiae of an aborted meeting between representatives RCOM and RIL on Monday morning. The blame game reached its crescendo with RIL charging RCOM with “misleading media.” The RIL spokesperson said late on Monday evening that no RCOM representative turned up to meet RIL at a meeting scheduled for Monday morning.

This came within a couple of hours of RCOM informing the media that it has invited RIL to meet in the week beginning July 14 “to clarify any doubts” on the deal structure being discussed with MTN. The RIL spokesperson said: “RIL, on July 2, invited RCOM to participate in a meeting at 11am today (7 July 2008) to commence the process of mutual conciliation under the non-competition agreement.

No representative of RCOM turned up at the meeting. RIL delivered a letter to RCOM at 1.49 PM today, placing on record the fact that no representative of RCOM turned up at the venue for the meeting at the scheduled time. RIL received a response from RCOM at 2.23 PM refusing to participate in the meeting.”

RCOM sources said they did not attend the meeting with RIL as the meeting was slated to discuss “conciliation”. They said,” There is no grounds for conciliation as RIL’s so-called claims on right of first refusal (ROFR) is untenable. We are ready to meet them to clarify details of the deal being discussed with MTN.” RCOM reiterated these points in a fax sent to RIL 2.23 PM on Monday afternoon.

RIL turned down this offer. In a response to RCOM’s afternoon fax, RIL has threatened to take legal action against RCOM in view of the latter’s “refusal to participate in the conciliation process as envisaged in the agreement.” It has also reiterated that it has already invoked the dispute resolution clause of the non-competition agreement, which was signed between RIL and various Anil Dhirubhai Ambani Group (ADAG) firms in January 2006 in order to implement the demerger of business between the Ambani brothers.

The two sides seem to be engaged in a high-stakes game of brinkmanship as the negotiations between RCOM and MTN enter the final stretch. With credit markets tightening and capital markets slumping around the world, the legal uncertainties would not make matters easier for RCOM.

The bone of contention is the January 2006 agreement. RIL claims that this agreement provides it a right of first refusal (ROFR) in case RCOM is sold to a third party. RCOM denies any such right. These developments come amidst speculations that MTN is wary of legal challenges to the deal. Besides, unconfirmed reports said that MTN would agree to continue talks with RCOM only if it had an assurance that Mukesh Ambani would drop his claims of RoFR and not derail the transaction.

Analysts share the view that the South African company would not want to be part of a combined entity whose future is uncertain. RCOM shares ended the day down 4.2% at Rs 419.80 rupees, even as the benchmark Sensex rose 0.5%.

[Honest 836]

MTN shareholders disappointed over lack of clarity

8 Jul, 2008, 1426 hrs IST, PTI

JOHANNESBURG: Amid continued acrimony between the Ambani brothers over a deal with MTN, disappointment has set on shareholders of the South African telecom major as exclusive talks for a possible transaction are drawing to a close today without any clarity, local media said.

"MTN stock gained about 4 per cent temporarily yesterday to trade at R125,92, rallying as investors took a gamble that corporate action of some kind was pending," a newspaper reported.

"Yesterday's lack of news will force the two mobile groups to issue some sort of update today, when their 45-day period of exclusive talks ends,"the report added.

Among the various probabilities being talked about, the report said, the "safest bet is that they will simply announce an extension to the exclusivity period, precluding any other player from making overtures to MTN."

However, some expect "MTN to say the exclusivity is over, enabling it to assess other less complicated offers while it continues to engage with Reliance."

The report also noted there could be an option to declare the deal is "off completely" and the fourth, but highly unlikey, option "would be news that a deal had been concluded, along with details of how they would structure some kind of share swap."

A day before the deadline, the two warring camps in India engaged in a strong exchange of words, with both sides spurning offers of talks made by the other.

RIL had proposed a conciliatory meeting, scheduled for yesterday, but RCOM refused to participate in it and instead proposed a 'clarificatory' meeting next week, which in turn was rebuffed by RIL.

[Honest 836]

RCom-MTN exclusive talks not being extended

8 Jul, 2008, 2208 hrs IST

NEW DELHI: The exclusivity agreement between South African telecom giant MTN and Anil Ambani group's RCOM for negotiating a possible amalgamation deal is not being extended, a source familiar with the development indicated.

There was, however, no official confirmation on the status of the 45-day exclusive agreement, which expired today, either from MTN or RCOM, which is engaged in a legal wrangle with Mukesh Ambani-led RIL.

Amid continued acrimony between the Ambani brothers over the deal, disappointment has set on shareholders of the South African telecom major, local media said.

"MTN stock gained about 4 per cent temporarily yesterday to trade at R125,92, rallying as investors took a gamble that corporate action of some kind was pending," Business Day newspaper reported here.

Meanwhile, both Reliance Communications and Reliance Industries today closed lower in the range of 1-2 per cent on the Bombay Stock Exchange.

Reliance Industries settled at Rs 1,978.60, down 2.44 per cent from yesterday's close. The scrip had touched intra-day high of Rs 2,015.

The scrip had dropped 4.78 per cent in the morning trade to touch a low of Rs 1,931.20.

Meanwhile, ADAG firm Reliance Communications closed at Rs 415.40, down 1.05 per cent from previous close.

During the day's trade, RCOM shares had plunged 5.90 per cent at Rs 395.05 over yesterday's close of Rs 419.80.

On May 26, RCOM had entered into a 45-day exclusivity agreement with MTN for possible alliance, which is estimated to create a $70-80 billion worth entity.

However, RCOM-MTN talks have been hit by uncertainties ever since Mukesh Ambani-led RIL claimed right of first refusal in a majority stake in the Anil Ambani group firm.

RIL also threatened legal action if any deal with the South African firm breached its rights. However, these claims have been termed as "factually and legally untenable and misconceived" by RCOM.

[Honest 836]

MTN may hold board meeting on Thursday to discuss RCOM deal

8 Jul, 2008, 2307 hrs IST, PTI

JOHANNESBURG: Maintaining a stoic silence over the fate of its agreement for exclusive talks with India's Anil Ambani group firm RCOM for an amalgamation deal, South African telecom giant MTN is likely to convene a board meeting on Thursday to discuss the issue.

Sources close to the development indicated that MTN could hold a board meeting to discuss the prospects of the possible deal, the 45-day exclusivity negotiations for which expired tonight, on July 10.

There was, however, no confirmation from either MTN or RCOM on the status of the negotiations that could create an estimated 70-billion dollar combined entity, that has come into controversy following the legal issues raised by Mukesh Ambani-led RIL.

[FEVIN-RAJ 61]

Haze over MTN deal as deadline passes

9 Jul, 2008, 0535 hrs IST, ET Bureau

MUMBAI /NEW DELHI: Boardroom dealings certainly do not lack drama, especially when the Ambani brothers are involved. On Tuesday, the Anil Ambani-controlled Reliance Communications (RCOM) and South African telco MTN played out their own little cliffhanger, matching, doubtless inadvertently, the unfolding political war of nerves at the Centre.

Late on Tuesday evening, the status of their 45-day exclusive merger talks that expired was still unclear, leading to intense speculation that the exclusivity period was not being extended. A PTI report, late in the evening, corroborated this version of events.

Suddenly, RCOM spokespersons were incommunicado and no official confirmation or denials were forthcoming from both companies. However, a couple of RCOM insiders admitted that the exclusivity period indeed may not be extended. This may mean that other contenders could enter the fray. The MTN board, according to the agency, might meet on Thursday to decide on the status of the deal.

Though there is absolutely no confirmation, rumours that Bharti-Airtel, MTN’s former suitor, or even more unlikely, RIL chairman Mukesh Ambani may be interested, swirled through Mumbai and New Delhi’s corporate circles during the day.

Both RCOM and MTN had promised to update their shareholders on the status of the exclusive talks on Tuesday. However, they neglected to do so at the time of writing. One person familiar with the negotiations said talks had not ended.

This person told ET that discussions about the funding of the deal, which would create one of the top global wireless companies, was on even early Tuesday evening. Industry sources said both the parties, which announced the commencement of exclusive merger talks on May 26, failed to conclude the discussions with Anil Ambani’s estranged brother Mukesh, asserting contractual rights flowing from the family settlement of 2005. The falling share prices of RCOM and MTN were also responsible for the deal getting delayed.

To add to the air of mystery and intrigue, Bharti Airtel, by some accounts, is learnt to be waiting in the wings to re-enter the race for MTN. This was, however, categorically denied by two senior Bharti Airtel officials ET spoke to.

The country’s largest telco called off its merger talks with MTN in May. One source close to Bharti said there was a remote possibility that the company may consider getting back into the fray if MTN formally calls off its talks with RCOM. “But MTN will have to approach Bharti for this. It’s very unlikely that Bharti will take the initiative.”

With Reliance Industries (RIL) claiming right of first refusal (RoFR) in RCOM, and threatening to take legal recourse against RCOM, MTN wants to be certain about avoiding a prolonged and painful legal dispute in India, said sources close to the development. “They could not agree to an alternative structure by the July 8 deadline as the previous one was scrapped on fears that it may lead MTN into a legal tussle,” they added.

ET had earlier reported that Anil Ambani would emerge as the single-largest shareholder of MTN through a complex deal which would see MTN becoming the holding company of RCOM. That version of the deal would have seen MTN launching an open offer for the ordinary shareholders of RCOM, and the Anil Ambani group swapping shares in RCOM to get MTN shares and become its single-largest shareholder. Once RIL intervened, an alternative structure in which RCOM would buy a 35-40% stake in MTN, is believed to have been discussed.

Earlier, Bharti and MTN had signed an ‘in-principle’ agreement on May 16 to acquire majority control of MTN and a term sheet was initialled between their lead bankers. This term sheet was presented to the MTN board on May 21.

Two days later, according to Bharti’s version of events, the MTN board presented a different structure, suggesting that Bharti should become a subsidiary of MTN while the Bharti promoters — the Sunil Mittal family and SingTel — would become the single-largest shareholder of MTN. Bharti claimed to have received commitments from European and American banks of funding of $60 billion.

In a strongly-worded statement on May 24, Bharti said it did not believe that its vision of transforming itself into a home-grown MNC “would have been severely compromised” by this “convoluted” structure. More strongly-worded statements are in store, judging by the latest developments.

[Honest 836]

MTN extends exclusive talks with RCOM

9 Jul, 2008, 1110 hrs IST, ET

JOHANNESBURG: South African mobile phone operator MTN Group said on Wednesday it had agreed to extend its exclusive talks with Reliance Communications until July 21, 2008.

MTN and Reliance Communications started talks on May 26 that could create a $66 billion emerging markets telecoms group with operations in about two dozen countries and around 120 million subscribers.

When the talks began, MTN had a market capitalisation of $38 billion and Reliance Communications was worth $28 billion, but a sharp slide in markets has eroded valuations.

[Honest 836]

MTN hires PR agency in India

9 Jul, 2008, 1701 hrs IST, PTI

NEW DELHI: South African telecom giant MTN, currently negotiating a potential amalgamation deal with Anil Ambani-led RCOM, has hired Avian Media, a communications consultancy, here to help manage its media relations in India.

While Avian Media, whose clients include aircraft maker Airbus and global majors like BAE Systems and Porsche, is understood to be working with MTN for past couple of months on certain other services, now it has been mandated as a facilitator between Indian media and Johannesburg-based firm.

MTN and RCOM today announced extending their exclusive negotiations for a possible deal till July 21, after the earlier 45-day exclusivity agreement expired yesterday.

Avian Media is a specialist communications consultancy focused mainly on travel, hospitality, auto, infrastructure, defence and technology sectors.

Its clients include Airbus, IATA, SIXT India, Iron Port, SKF, Sona Group, IHG, BAE Systems, TotalFinalElf India, Yatra Online, Porsche, Dunhill and Escada with mandates like media outreach programmes, strategic counsel, corporate PR and planning and conceptualisation of international communication.

[Honest 836]

MTN may hold board meeting to discuss RCOM deal

9 Jul, 2008, 2243 hrs IST, PTI

JOHANNESBURG: South African telecom giant MTN, which on Wednesday extended agreement for exclusive talks with Anil Ambani Group firm RCOM till July 21, is likely to convene a board meeting tomorrow to discuss the potential amalgamation of the two companies.

Sources close to the development indicated that MTN could hold a board meeting to discuss the status of talks.

The talks between the two firms for a possible amalgamation has come into controversy following the legal issues raised by Mukesh Ambani-led Reliance Industries.

The news of extending the 45-day exclusivity agreement from July 8 cleared the uncertainty over the status of the talks and was greeted by investors in both the companies, as reflected in the surge in share prices of MTN and RCOM.

While RCOM shares settled with a gain of about six per cent on the Bombay Stock Exchange, MTN also appreciated by more than one per cent on the Johannesburg Stock Exchange.

RCOM and MTN have agreed to continue their negotiations for a potential business combination, and have extended the period of exclusivity until July 21, RCOM said in a statement.

About $50 billion-worth telecom major MTN also issued an identical statement in a regulatory filing with the JSE.

Both the firms, however said that there was no certainty either on completion, or the timing of the said proposal.

RCOM and MTN had first announced start of a 45-day exclusivity period on May 26, which ended yesterday.

In today's statements, the two companies also cautioned their respective shareholders about dealing in their shares until a further announcement to this regard.

Following today's extension, RCOM and MTN stocks rose sharply and RCOM shares settled nearly six per cent up at Rs 440.95, after an intra-day rally of over nine per cent to as high as Rs 454 at the BSE.

[Honest 836]

RCOM gets lifeline for MTN

10 Jul, 2008, 0303 hrs IST, ET

MUMBAI: Anil Ambani’s Reliance Communications (RCOM) on Wednesday extended its 45-day exclusive merger talks with South African telco MTN till July 21, which seems to indicate that it is trying to arrive at a deal that would remain insulated from the rivalry between the Ambani brothers.

Both the companies failed to update the stock exchanges on Tuesday when the exclusivity period expired, leading to speculation that the exclusivity period might not be extended. The two sides began negotiations on May 26 after Bharti Airtel walked out of talks with MTN.

“RCOM and MTN have agreed to continue their negotiations in relation to such potential business combination, and have extended the period of exclusivity until July 21, 2008,” RCOM said in a statement. “A further announcement will be made when appropriate. It is to be noted that there is no certainty either on completion, or the timing of the said proposal. In the meantime, shareholders are advised to exercise caution in their dealings in the companies’ securities dealings until a further announcement is made,” it added. MTN also issued a similar statement simultaneously to the Johannesburg stock exchange.

[Honest 836]

Reliance-MTN talks' extension seen as sign of progress, investor confidence

11 Jul, 2008, 0815 hrs IST, ET

JOHANNESBURG: South African mobile giant MTN is still maintaining a firm silence on a possible deal with Reliance Communications, but analysts here said the fact that it had extended exclusivity talks with Reliance indicated that there was progress.

Investor confidence in the continued talks were reflected in the slight rise of 0.21 percent in the MTN share price, while the stock exchange sector under which it is listed shed just over 3 percent

MTN made a terse statement via the Johannesburg Securities Exchange Wednesday after anxiously making stakeholders and the media wait for more than a day when its 45-day exclusivity talks agreement with Reliance Communications ended Tuesday.

"MTN has agreed to continue its negotiations with Reliance in relation to such potential business combination, and has extended the period of exclusivity until 21 July 2008," the statement read.

"There is no certainty that these discussions will result in a transaction. Accordingly, shareholders are advised to continue to exercise caution when dealing in MTN securities," the statement continued, but analysts here were confident that the extension indicated that there was progress in the talks that could see a $70b mobile company emerge in the Africa/Middle East/Asia region.

There were also concerns that the talks may have been delayed by an intervention from Mukesh Ambani of Reliance Industries, the older sibling of Anil Ambani, the majority shareholder in Reliance Communications. Mukesh had contacted MTN to indicate that he had first right of refusal for any sale of a stake in Reliance Communications in terms of an agreement when their father's company was split into two following a rift between the brothers.

Although MTN has still refused to comment on the Ambani feud, sources close to the company said MTN believed that it was a matter for the brothers to resolve themselves.

Confidence was high that the talks were going well and that a conclusion was in sight: "My point is, why bother to extend the discussion if it's not going to materialise?" portfolio manager Sisa Rafuza of Metropolitan Asset Managers here told the daily Business Report Thursday.

Rafuza said the likelihood of the deal happening in some shape or form was relatively high.

Lindsey McDonald, an analyst at research company Frost and Sullivan, told Business Report that the complicated nature of the deal was certainly a factor in the extension as both companies tried to secure the best possible outcome. McDonald said the potential value of the deal was "too great to try to conclude negotiations quickly," adding that it would be unfortunate if the deal did not go ahead.

[Honest 836]

MTN sweeps Africa's business awards

11 Jul, 2008, 1552 hrs IST, PTI

JOHANNERSBURG: South African telecom giant MTN, which is currently negotiating a potential amalgamation with Indian billionaire Anil Ambani-led RCOM, on Friday said it has been named as the top business as well as brand of the year in Africa by Commonwealth Business Council.

In a statement issued here, MTN Group said that it has won the inaugural 'African Business of the Year' and 'Brand of the Year' awards presented in London by the Commonwealth Business Council (CBC) African Business Awards.

MTN has bagged the African Business of the Year award on the basis of its "outstanding returns and growth rates coupled with innovative working techniques, and the development of staff and the community it operates in".

Besides, the Brand of the Year award recognises companies that have achieved outstanding brand recognition in the past 12 months, with wide appeal and wider recognition both in Africa and worldwide. This award is applicable to branding and re-branding exercises, the statement said.

Earlier on July 9, MTN said that it was extending the exclusive negotiations with RCOM for a potential business amalgamation till July 21, after its earlier 45-day exclusivity agreement expired on July 8.

MTN and RCOM had first announced start of exclusive talks on May 26 after the South African firm's talks fell apart with another Indian telecom major Bharti Airtel.

However, the talks between MTN and RCOM have been hit by uncertainties after Reliance Industries, led by Anil's elder brother Mukesh Ambani, threatened legal action if a deal breaches its right of first refusal in RCOM. However, RIL's claims are being contested by RCOM, which has said that these claims were legally and factually untenable.

If successful, a deal between RCOM and MTN could create a combined entity worth about 70-80 billion dollars.

[Anupe 14]

At office one of my collegues was telling me the inside info is that Anil Ambani is selling his entire stake in RCOM to MTN. This friend of mine has a brother who is working in RCOM trivandrum and he got the news from there. And the whole issue of Mukesh stepping in happened cuz Reliance Industries wasnt offered first chance at accrueing RCOM or as per their parlance of "right of first refusal".

[KumaarShah 143]

Very interesting news snippets......

[petar 15]

Deal is almost thru....

[FEVIN-RAJ 61]

MTN sends feelers to Bharti for fresh talks

15 Jul, 2008, 0509 hrs IST,Joji Thomas Philip, ET Bureau

NEW DELHI: South African telco MTN is learnt to have sent feelers to Bharti for reviving talks, if it fails to clinch a deal with Reliance Communications, according to a source linked with discussions between the two companies.

MTN and Bharti Airtel, which were in merger talks in May, but the Indian telco had called off talks after both companies failed to agree on the corporate structure of the combined entity.

The source close to deliberations between Bharti and MTN also added that “the Indian telco was very open to take the discussions with MTN forward if such possibilities existed.” When contacted, the Bharti spokesperson said the “company does not comment on market speculation.”

Last week, MTN and India’s second-largest mobile operator Reliance Communications (RCOM) agreed to “extend their period of exclusivity for talks until July 21.” Therefore, a formal approach by MTN appears unlikely for the time being.

But if MTN has indeed informally sent feelers to Bharti, it would mean that talks between MTN and RCOM may hit a rough patch, possibly over the right of first refusal (RoFR) issue raised by Reliance Industries (RIL).

Of course, it is possible that MTN may have sounded out Bharti in order to keep RCOM on its toes. Meanwhile, there is speculation that RCOM may have presented a new structure to MTN.

According to this, Anil Ambani would transfer a part of his 66% shareholding in RCOM to MTN, thereby allowing him to be the single-largest shareholder in both companies for the time being and hence skirt the RoFR issue.

MTN’s possible renewed interest in Bharti would constitute a dramatic turnaround of events. Two days before talks between Bharti and MTN were formally called off in May end, the South African telco had informally approached RCOM to find out whether it would be interested in a deal. RCOM had agreed then. The shoe may be on the other foot this time.

Discussions between Bharti and MTN had fallen through after both companies had signed a term sheet because MTN’s board had rejected the proposal to merge itself with the Indian telco and instead suggested a structure which would make Bharti a subsidiary of the South African company.

After Bharti’s pullout, MTN has been in exclusive discussions with the Anil Ambani-owned RCOM since May 26 for a potential merger to create a $70-billion telco. However, RIL’s RoFR claim in case of RCOM becoming a MTN subsidiary has resulted a possible slowdown in discussions between the two and sent the Indian company scrambling for new structures.

Meanwhile, reports appearing in the South African media speculate that MTN could look at a “less controversial” deal with Bharti Airtel rather than pursue a potential merger with RCOM. “The original, less controversial merger with Bharti Airtel could be back on the cards,” South African daily The Times said, while adding that MTN was looking for a ‘clean deal’.

“Media frenzy surrounding MTN’s proposed merger with Reliance Communications is probably creating a useful smokescreen to allow it explore opportunities in other countries well away from the spotlight,” another South African daily Business Day reported.

[FEVIN-RAJ 61]

MTN says made no advances to Bharti

15 Jul, 2008, 1603 hrs IST, REUTERS

JOHANNESBURG: South Africa's MTN Group said on Tuesday it had made no attempt to talk to India's Bharti Airtel and was still talking to Reliance Communications.

"MTN has not made any advances to Bharti. Normally we don't comment on speculation, but this time we refute this (that MTN has made fresh advances to Bharti)," Nozipho January-Bardill, MTN's spokeswoman, said.

Countering the report that MTN has sounded out Bharti Airtel for reviving merger talks if it fails to agree a deal with Reliance Communications, January-Bardill said MTN was continuing exclusive talks with Reliance Communications.

Richard Hurst, a telecoms analyst at global advisory firm IDC, said, "There is a bit of mixed signals, but I don't think MTN would consider Bharti. They (MTN) will want to bed down current negotiations before moving back to Bharti."

He added it would do MTN well to press on with the current negotiations with Reliance Communications.

MTN shares were trading up 1.1 per cent at 119.05 by 0941 GMT, outperforming the Top-40 index which was down 1.3 per cent