Reliance Communications Starts Exclusive Discussions With Mtn

[Honest 836]

RIL kicks off arbitration against RCom, sent 4th letter threatening action over MTN

Press Trust of India / New Delhi July 17, 2008, 18:31 IST

Mukesh Ambani-led Reliance Industries today started arbitration process against RCom and nominated Justice B P Jeevan Reddy as arbitrator for disputes with younger brother Anil's group firm, which is talking to South African telecom giant MTN for a merger deal.

In a statement, that almost coincided with RCom's charge that RIL issued a fourth letter threatening legal action on MTN discussions, the Mukesh group's flagship company said, "RCom has refused to participate in the conciliation meetings under the alternate dispute resolutions provisions contained in the Non-Competition Agreement.

"RIL has commenced arbitration proceedings by nominating Justice B P Jeevan Reddy, a former judge of the Supreme Court of India as an arbitrator for the resolution of the disputes." RCom spokesperson, on the other hand, said that "RIL's notice for arbitration proceedings is legally and factually unwarranted".

[@ksh@T 20]

RIL drags RCOM to arbitration on MTN

NEW DELHI: The plot has thickened. Mukesh Ambani-owned Reliance Industries (RIL) on Thursday said it has started arbitration proceedings against younger brother Anil Ambani’s Reliance Communications (RCOM) to thwart the latter’s merger with Africa’s largest telco MTN.

Sources in RCOM dismissed RIL’s move and said the arbitration can only happen when ‘both’ parties refer the dispute to a person outside the court.

According to RCOM, there was no scope for arbitration as there was neither any dispute nor any occasion for any conciliation process.

It would appear that Samajwadi Party leader Amar Singh’s attempt to invoke political intervention at the highest levels of the government to settle the dispute between the Ambani brothers has come a cropper.

Thursday’s development comes three days after the RIL chairman Mukesh Ambani met Prime Minister Manmohan Singh. While it was widely speculated that Mr Singh could play peacemaker between the feuding brothers, the Prime Minister’s office on Tuesday dismissed suggestions that the PM would do any such thing.

Mr Amar Singh, whose party’s support is crucial for the survival of the UPA government, had slammed RIL’s move to thwart an RCOM-MTN merger and demanded that the Prime Minister intervene to solve the feud between the Ambanis. “The MTN deal is good for the country,” he had said.

RIL’s move could potentially derail the ongoing talks between RCOM and MTN. Besides, the latest spat between the two brothers comes barely a week after MTN and Reliance Communications extended their 45-day exclusivity talks by 15 days. The extended exclusivity period, during which only RCOM gets to negotiate with the South African Telco, expires on July 21.

Meanwhile, in another development, RIL sent yet another communication to MTN, stating it would take legal auction if the South African telco was to merge with RCOM. This is RIL’s fourth letter to MTN on this issue.

Industry sources say MTN has asked RCOM to sort out all legal issues with RIL as a precondition for the deal. There is a buzz that MTN had extended the exclusivity period by 10 days for the two groups to sort out their differences.

At the same time, as reported by ET earlier this week, MTN is learnt to have sent feelers to Bharti Airtel for reviving talks if it failed to clinch a deal with RCOM. MTN and Bharti Airtel were close to a merger in May but the Indian telco called off the talks after the two companies failed to agree on the corporate structure of the combined entity.

RIL said it had started arbitration process since RCOM had failed to participate in meetings or enter into talks to resolve a dispute concerning ownership of shares. The dispute relates to the RIL stance that it has the right of first refusal over RCOM in the event of a change of management, a claim that has been repeatedly denied by Anil Ambani’s Reliance-ADAG.

“RIL has commenced arbitration proceedings by nominating Justice BP Jeevan Reddy, a former judge of the Supreme Court of India, as an arbitrator. RCOM has refused to participate in the conciliation meetings under the alternate dispute resolution provisions contained in the Non-Competition Agreement,” RIL said in a statement.

The war of words continued as the RCOM spokesperson immediately retaliated stating that ‘RIL’s notice for arbitration proceedings is legally and factually unwarranted’.

“RIL’s malafide design to derail MTN discussions is clearly exposed. RIL has successfully destroyed India’s image in foreign eyes,” the RCOM spokesperson added. Again, responding to RIL’s allegations that RCOM had refused to participate in the conciliation meetings, the telco said “neither was any dispute nor any occasion for any conciliation” process.

Another RCOM source pointed out that even if RIL’s claims were ‘theoretically true’, RIL could only start arbitration in the event of a deal. “RIL claims that it has RoFR if there is a transfer of shares or a change in management. Neither of this has taken place. So, where is the case to launch an arbitration,” the RCOM source added.

A merger between RCOM and the South African telco will create a global telecom giant with close to 120 million subscribers with its footprint across 23 countries and covering a population of two billion, a third of the world.

The combined entity will have a market cap of over $60 billion, revenues of $14.4 billion, an operating profit of over $6 billion and assets worth $26.8 billion, and emerge as the second-most profitable operator in emerging markets after China Mobile.

[Honest 836]

Reliance Communications-MTN mutually end tie-up talks

18 Jul, 2008, 2123 hrs IST, ET

NEW DELHI: Reliance Communications and South Africa's MTN on Friday mutually ended tie-up talks after Mukesh Ambani-owned Reliance Industries (RIL) on Thursday started arbitration proceedings against younger brother Anil's RCom to thwart the latter’s merger with Africa’s largest telco.

RCom said that it is unable to presently conclude the deal due to regulatory issues.

The No. 2 mobile carrier in the country has been in exclusive talks with MTN since late May to create a top-10 global telecoms group spanning about two dozen countries. But a claim by elder brother Mukesh of first right of refusal on Reliance Communications shares had complicated prospects for a deal.

The dispute took a fresh turn on Thursday when Mukesh, who runs RIL started arbitration proceedings on the share claim.

However, Reliance Communications investors on Friday shrugged off the latest twist in a family squabble clouding the group.

A 45-day exclusivity period between RCom and MTN expired earlier this month and an extension was due to end on Monday.

The talks have been overshadowed by the dispute and whether MTN would risk striking a deal which could then be beholden to India's judicial system.

[@ksh@T 20]

well it was quite sad that anil's so much effort remained of no use . . . really SAD news that the aimof anil to become a global telecom personality was again rumbled down . . . definitely by his elder mukesh

[Honest 836]

RIL says no comments on RCOM-MTN deal collapse

Press Trust of India

New Delhi, July 18 (PTI) Mukesh Ambani group flagship company RIL, that has initiated the arbitration process against Anil Ambani group firm RCOM on its negotiations with South African MTN for a possible merger, today declined to comment on the collapse of the deal.

"We have no comments to offer at this point," RIL spokesperson told PTI when asked about comments and the fate of the Arbitration, for which the company had yesterday nominated Justice B P Jeevan Reddy as the arbitrator.

The negotiations between RCOM and MTN had hit a rough pocket last month when RIL claimed the first right of refusal on majority stake in ADA group company, which was perceived to be talking for a deal through share swap.

[Himanshu Singh 19]

It is going to be the beginning of the end of mukesh ambani.

[KumaarShah 143]

^^^

Is it MDA's or ADA's end that you are referring to?

It is terribly sad that ADA could not sew up the deal with MTN.

As I see things, my bet would be on ADA seeing the beginning of the end from now onwards. He has been making all the wrong moves recently without foreseeing problems that may come up from the family front itself. All his businesses have some problem or the other with MDA. Let him first sort out all problems with MDA once and for all or he will be finished for all.

[Honest 836]

MTN Deal: Bharti may be open to fresh talks

19 Jul, 2008, 0415 hrs IST, ET

NEW DELHI: Reliance Communications (RCOM) and South Africa’s MTN on Friday announced that merger talks between the two telcos have ended. Anil Ambani-owned RCOM has become the second Indian telco in as many months to fail in pulling off a merger with MTN.

Bharti Airtel and MTN were close to a merger in May but the Indian telco called off the talks after the two companies failed to agree on the corporate structure of the combined entity.

“Owing to certain legal and regulatory issues, the parties are presently unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse,” Reliance Communications said in a statement.

MTN too issued a similar statement to Johannesburg Stock Exchange News Service late Friday evening, adding: “Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse and caution is no longer required to be exercised by shareholders when dealing in MTN securities.”

The failure of RCOM and MTN to clinch a deal may present a second chance to Bharti Airtel to re-engage with the South African telco. As reported by ET earlier this week, MTN is learnt to have sent feelers to Bharti for reviving talks if it failed to clinch a deal with RCOM.

Sources close to the development said that Bharti was ‘open to take the discussions with MTN forward’. However, it is possible that other global telcos may also enter the fray for MTN.

A top industry source said the deal had hit a big roadblock as early as June 12, when Mukesh Ambani’s Reliance Industries wrote to MTN claiming that it has the right of first refusal over RCOM in the event of a change in management or change in the ownership of shares of the Indian telco.

Friday’s announcement means that RCOM and MTN have mutually agreed to call off talks three days prior to the end of the exclusivity period. Earlier this month, following the end of the 45-day exclusivity period, both telcos had agreed to extend the timeframe by another two weeks to July 21.

The formal end of talks comes a day after RIL had said it has started arbitration proceedings against RCOM to thwart a merger. RIL on Thursday had also said it would take legal action if the South African telco were to merge with RCOM.

The dispute between the two Ambani brothers relates to the RIL stance that it has the right of first refusal, a claim which has been repeatedly denied by the Reliance ADA Group.

The RCOM-MTN deal had assumed political overtones. The Samajwadi party, the UPA’s new partner at the Centre, has been pressing for the intervention of Prime Minister Manmohan Singh to play peacemaker between the feuding brothers.

Earlier this week, SP general secretary Amar Singh had slammed RIL’s attempts to ‘derail the deal’ while adding that the MTN deal was good for the country. In the event, no high-level political intervention seems to have taken place. On Friday evening, Mr Singh, when contacted by ET, declined to comment.

While no details of the RCOM’s negotiations with MTN have been officially disclosed, sources close to the negotiations have told ET that the deal structure which was envisaged involved RCOM becoming a subsidiary of MTN and RCOM’s promoter ADAG emerging as MTN’s largest shareholder.

This structure proved fatal for the deal, because Reliance Industries claimed it had a right of first refusal if RCOM was sold. While RCOM vehemently denied the existence of any such right, the legal uncertainties proved too much for MTN, leading to the deal’s collapse.

[Honest 836]

MTN saga: Tale of Ambanis and Sunil Mittal

19 Jul, 2008, 0640 hrs IST, ET

Mukesh Ambani • Sunil Mittal • Anil Ambani

NEW DELHI: The twists in the MTN saga brought together three of India’s corporate czars, both the Ambanis and Sunil Mittal, and provided them a unique, if unwanted opportunity, to determine each other’s destiny.

RCOM chairman Anil Ambani had pulled off a coup when he landed an agreement for exclusive talks with MTN within 24 hours of Bharti Airtel pulling out of negotiations with the South African telco in late May.

Mr Ambani had seemed to have pulled the rug from under the feet of his arch rival Bharti Airtel chairman Sunil Mittal. But seven weeks down the line, it is another Ambani, older brother Mukesh, who seemed to have handed a second chance to Mr Mittal as Bharti looks to re-engage with MTN.

The intervention of the loquacious Samajwadi Party general secretary Amar Singh, a self-proclaimed friend of Anil Ambani, and rumours of high-level political attempts at mediation, added another twist to the saga.

The wheel seems to have come full circle from late May. Mukesh seems to have done to Anil what the latter did to Sunil earlier. Whether RCOM entered into negotiations with MTN once talks with Bharti had failed, or whether it was its eagerness to explore all options with MTN which resulted in the collapse of talks between the South African firm and Bharti, is a matter of conjecture.

Yet some industry sources share the view that that it was Anil’s offer of a ‘better’ deal that led MTN to call off its proposed merger with Bharti after both companies had signed a term-sheet.

But, just when it seemed that RCOM and Mr Anil Ambani were giving final touches to consummating a merger with MTN to create a global telecom giant with close to 120 million subscribers and a footprint stretching from the Cape of Good Hope to the Himalayas across 23 countries and covering a population of two billion, the elder Ambani, Mukesh, suddenly asserted Reliance Industries’ (RIL) right of first refusal (RoFR).

Industry sources say RIL’s claims of RoFR was what reportedly brought discussions between the Indian and South African telco to a standstill. A top industry source said the deal was doomed from the day RIL sent a letter to MTN, claiming its first right of refusal to any stake sale by RCOM.

The implication: After being pitted against each other (before the Reliance empire was split between the two brothers) and after having fought a slew of bitter corporate wars, Mukesh Ambani was well on his way to delivering MTN back to Bharti.

The drama intensified on Thursday after RIL said it had started arbitration proceedings against RCOM to thwart the latter’s merger with MTN. Even as RCOM dismissed RIL’s move and said the arbitration cannot be launched unilaterally and can only happen when ‘both’ parties refer the dispute to a person outside the court, the development only fuelled more doubts about the deal going through.

The past is perhaps the best indicator to explain the linkages between three of the country’s largest CEOs. The battle between the Ambanis and Mittal is nearly a decade old, while that between the Ambani brothers has been on for the past three years.

Telecom : Mukesh Vs Sunil; Anil Vs Sunil

On the telecom front, while Mr Mittal was earlier pitted against the older Ambani (Mukesh), he has been fighting younger brother Anil Ambani for the last three years. Bharti is currently miles ahead of RCOM in India, but tables would have turned if the latter had clinched a deal with MTN.

Little wonder that Bharti wants to revive talks with MTN considering that a merger between RCOM and the South African telco will create a global telecom giant with a market cap of over $60 billion, revenues of $14.4 billion, an operating profit of over $6 billion and assets worth $26.8 billion, and emerge as the second-most profitable operator in emerging markets after China Mobile.

The stakes are high as such a merger will overshadow Bharti, which currently has a market cap of a over $40 billion with close to 70 million subscribers and no significant presence outside India.

At the same time, it must be pointed out that Mr Mittal has had the upper hand in the telecom space only over the last two years. In 2005, RCOM (then called Reliance Infocomm and controlled by Mukesh) had not only managed to dislodge Bharti from its market leadership position, but nearly pushed Mr Mittal to the edge.

Mr Mittal himself has acknowledged this and in an earlier interview told ET that at the height of the WLL crisis in 2002, Battleship Bharti was a “machine that was creaking”. The pace of Infocomm’s national rollout, coupled with cheaper tariffs and handsets, saw the company shoot past Bharti in subscriber numbers and forced Mr Mittal to invest beyond his company’s means and left Bharti on the verge of collapse.

Bharti then made a slow and steady comeback even as RCOM was busy fighting battles on several fronts, widespread billing problems, trouble with the law for alleged ‘illegal’ routing of international calls, a down market image and instability in management.

RCOM, under Anil Ambani, could have cut Bharti to size last year had it been successful in its bid for Hutchison Essar, the CDMA major would have had over 50 million subscribers and close to a 40% market share, way ahead of Bharti with 30 million subscribers.

Mr Mittal had then played spoilsport by providing the no-objection certificate (NOC) to Vodafone, which enabled the UK-based telco to outbid RCOM and gain a controlling stake in Hutchison Essar. Since then, both Mr Mittal and Mr Anil Ambani have been involved in several battles, ranging from spectrum to RCOM’s planned entry into the GSM space to Bharti refusing to bail out Reliance Communications earlier this year during the undersea cable crisis.

The political scenario at the Centre may yet allow Ambani junior to have a one-up on Mr Mittal. This is because, SP’s Amar Singh has been pressing upon the PMO to impose a heavy one-time fee on GSM operators who hold spectrum beyond the 6.2 MHz.

Last year, RCOM chairman Anil Ambani had written several letters to both the PM and the communications ministry on exactly similar lines. The UPA may be forced to concede to Mr Singh’s demands this time around, ET has learnt that the PMO has asked both the communications ministry and the finance ministry to look into Amar Singh’s demands.

Ambani Vs Ambani

Amidst all this, the last three years have also seen both the Ambani brothers involved in a series of bitter wars and endless disputes across sectors from gas to power to aviation to telecom.

The 2005 family agreement between both brothers exists only on paper as both Ambanis have dragged each other to courts on several issues, the biggest of which is the supply of gas by Mukesh’s RIL from the Krishna Godavari basin for Anil’s upcoming $8-billion project in setting up a 7,450 MW power plant in Dadri, UP.

RIL and Anil’s RNRL have been locked in a prolonged legal tussle over the gas-sales agreement signed in 2005, by which RIL had committed to sell a portion of the KG basin gas to RNRL at a fixed price. However, differences arose after the petroleum ministry rejected the gas sales contract between the two.

In an interim order last year, the Bombay High Court had restrained RIL from selling the gas to any third party, with the purpose of protecting the interests of R-ADAG. The case is now before a division bench. RIL may sign agreements for the sale of gas to third parties only after the court rules in its favour. The case will come up for hearing on July 22.

The next bone of contention for the feuding brothers was the Rs 7,500-crore Mumbai Trans-Harbour Link project to link Sewri in south Mumbai with Nhawa near Jawaharlal Nehru Port Trust (JNPT) in Navi Mumbai.

While Mukesh Ambani bagged the project initially, ADAG, whose own bid was rejected on the basis of financial parameters, contested the decision. The Supreme Court later upheld Anil Ambani’s appeal. However, the Maharashtra government rejected Anil Ambani’s bid as ‘unrealistic’, and instead hiring Maharashtra State Road Development Corporation to construct the sea bridge.

The brothers had also put in separate bids for a 7.5-hectare plot in Mumbai’s Bandra-Kurla Complex (BKC). Elder brother Mukesh beat Anil to it, acquiring the plot for Rs 1,104 crore, where he plans to construct a convention centre with a 2,000-seat auditorium.

Much to ADAG’s consternation, the state government increased the floor space index (FSI) from one to four soon after Mukesh’s successful bid. The Anil Ambani group’s objection that it was done after the bid was announced was turned down by the Bombay High Court.

The Ambanis are not only fighting it out over new, upcoming projects. Their disputes extend to projects bagged prior to the demerger. The brothers are fighting a case against each other in the Bombay High Court over a plot of land at the Chhatrapati Shivaji International Airport, which was allotted by the Airports Authority of India (AAI) to RIL subsidiary Reliance Transport and Travels (RTTL) in 2000. However, RTTL went to Anil Ambani after the brothers parted ways. Both brothers are now staking claim to the same hangar space at the airport. The case comes up for hearing next on July 24.

Retail: Mukesh Vs Sunil

Meanwhile, Mukesh and Sunil had moved their battlefield to retail. In 2006, prior to making his retail debut, Mukesh almost cleaned out Sunil Mittal’s agri-venture FieldFresh Foods by poaching nearly 70 top employees.

According to industry sources, Mukesh’s move had put the brakes on Bharti’s plans for a quick entry into the domestic food retail space. All through 2006 and 2007, both Bharti and Reliance were involved in a battle to woo farmers in Punjab after both companies had identified this state as a key hub for their retail and agri business.

Mukesh had a headstart in the retail war and announced plans to invest around Rs 25,000 crore with a revenue of Rs 90,000 crore by 2010. Sunil, in, turn came back by tying up with the world’s largest retailer Wal-Mart.

However, Mukesh continues to hold a distinct edge, Reliance Retail has a pan-India presence across several formats and has over 600 stores, while the Bharti Wal-Mart combine is yet to open its first outlet. Soon, Anil Ambani may add a new dimension to the retail war, industry sources say the ADAG group has plans to foray into select retail formats.

The telecom link

Yet, it’s telecom which is the most decisive to the fortunes of these three corporate czars. With the MTN deal coming unstuck, Anil Ambani seems to have lost the opportunity to be propelled to the global stage, gaining the independent identity he’s been searching for since the family de-merger and the chance to score over both his elder brother Mukesh and rival Sunil Mittal.

For Mr Mittal, it’s another chance at the MTN deal now. He may have exited the telecom world three years ago but Mukesh Ambani turned out to be the main player in this cross-border telecom saga.

[Honest 836]

Not bound by RIL's alleged RoFR in RCOM: Anil Ambani firm

19 Jul, 2008, 1946 hrs IST, PTI

NEW DELHI: A day after the collapse of deal between South Africa's MTN and RCOM, an Anil Ambani company on Saturday charged Mukesh-led RIL with causing substantial harm to it as a majority shareholder in the Indian telecom entity and asserted its rights to claim damages.

AAA Communications, a private company of Anil Ambani that holds 63.38 per cent equity in RCOM, today wrote to RIL claiming it was "free to and shall deal with RCOM shares as it deems fit."

It claimed that it was not a party to any "alleged non- compete agreement dated January 12, 2006" and hence was not covered by any alleged rights of first refusal to RIL.

An RCOM spokesperson, however, declined to comment when asked about the non-compete agreement, citing which RIL had initiated the arbitration process against RCOM by nominating a former Supreme Court judge Justice B P Jeevan Reddy as an arbitrator on July 17.

A spokesperson of RIL, which had thrown the spanner in negotiations between RCOM and MTN, which could have possibly created a USD 70-billion telecom entity, by asserting its right of first refusal on majority stake in RCOM, declined to comment immediately on the letter from Anil Ambani firm.

The Anil Ambani firm termed RIL's action as "uncalled for, offensive and clearly motivated" and said RIL's "mala fide interference caused significant harm to AAA Com as a substantial RCOM shareholder".

"AAA Com reserves right to claim direct and consequential damages from RIL," the spokesperson said.

The Anil Ambani firm's claim that it was free to deal with RCOM shares in whatever way it deemed fit is also seen as a signal that it was ready to start negotiations for any deal with any entity, including MTN.

The statement from the Anil Ambani firm's spokesperson comes close after RCOM and MTN calling off their negotiations citing "legal and regulatory hurdles".

"The two sides were unable to conclude the transaction due to certain regulatory issues," RCOM said in a statement yesterday night, ahead of the July 21 expiry of the extended agreement for exclusive talks with MTN.

[Honest 836]

RIL not to withdraw arbitration process

Mumbai, July 19 Reliance Industries (RIL) will not withdraw the arbitration process it has initiated against Reliance Communications (RCom) even though the RCom-MTN talks have been called off, sources close to the disputing parties indicated.

The talks may have been called off, but RCom’s intent to disregard the validity of what RIL holds as its Right of First Refusal remains the issue, said sources close to RIL. This would indicate that RIL wants to stall any such stakes sale by RCom in the future.

The arbitration process can, of course, move ahead only if RCom agrees to be a party to it. RIL has already nominated an arbitrator for disputes with RCom which would have to appoint its own arbitrator. The procedure then calls for a third arbitrator acceptable to both parties.

The Anil Ambani camp said the January 12, 2006 non-compete agreement has no binding on RCom or any other group company. AAA Communications (which is the promoters’ investment vehicle holding 63.38 per cent equity in RCom) is not party to any “alleged non-compete Agreement”, a statement from the group said.

There is speculation that AAA Comm itself may resume talks with MTN since the “alleged ROFR” is only between RIL and RCom, said sources.

Earlier, RCom said that RIL’s reference to the January 12, 2006 agreement was misleading as the Anil Ambani-led company had written to RIL on the same day (Jan 12, ’06), rejecting the “unilateral procedure adopted for finalising such an agreement.”

[Honest 836]

Fresh punch in Ambani match

20 Jul, 2008, 0015 hrs IST, ET

ADAG sends letter to RIL, may seek damages

MUMBAI: The sibling rivalry between the Ambani brothers is far from over. AAA Com, an investment arm of the Anil Ambani group, on Saturday shot off a letter to Mukesh Ambani’s flagship Reliance Industries (RIL) threatening that it “reserves the right to claim direct and consequential damages from RIL” for dragging it into the alleged non-compete agreement between the Ambani brothers.

The letter was sent a day after Anil Ambani’s telco Reliance Communications (RCOM) had called off the merger talks with South Africa’s MTN. The collapse of the merger talks followed initiation of an arbitration process by RIL against RCOM and AAA Com on alleged violation of non-compete agreement.

The latest round of rivalry between the Ambani brothers, who separated their business three years ago after the longest and most bitter battle in the history of Corporate India, started a few weeks ago when RIL claimed that it reserved the right of first refusal (RoFR) in case any business of the Anil Ambani group was sold out. RIL had said the RoFR was a part of the non-compete agreement which was signed between it and four firms of the Anil Ambani group including (RCOM) in January 2006. The Anil Ambani group had denied the RIL claim.

But RIL had informed MTN about its so-called RoFR and had started arbitration proceedings against RCOM and AAA Com by appointing an arbitrator for violation of the so-called pact. Industry sources said the RIL move had forced the MTN management to develop cold feet about the merger with RCOM as the foreign company did not want to get involved into a lengthy legal tussle in India.

The broad contours of the deal, which was discussed between RCOM and MTN, suggested that the Anil Ambani group would emerge as the single largest shareholder of the foreign company through a complicated deal. RCOM would have become a subsidiary of MTN on completion of the transaction. RIL, however, had interpreted it as a sale of RCOM, industry sources said.

In the letter AAA Com, which holds nearly 64% stake in RCOM, said it was not a party to the so-called non-compete agreement. The pact was executed to implement the demerger of businesses between the Ambani brothers in June 2005. According to AAA Com, the alleged agreement between RIL and RCOM was not binding on it. “RIL’s mala fide interference caused significant harm to AAA Com as a substantial shareholder of RCOM,” it added. The RIL spokesperson was not available for comments.

[Greatest 55]

there goes the days of elder and younger siblings rivalry to a new level!!

[Honest 836]

MTN's India adventure over

LONDON/JOHANNESBURG: In what seems to be curtains for MTN's Indian adventure with the collapse of talks with Anil Ambani-led RCOM after a similar fate of negotiations with Bharti Airtel, the South African company might now open doors to other alternative offers, reports said on Monday.

We tried Indians and it did not work... So we will look at other channels and there will be people looking at MTN as well,” UK daily Financial Times quoted a senior MTN executive as saying.

Another report in South African financial daily 'Business Day' said that MTN's failed bids may “open door to alternative offers”.

MTN's Indian adventure is now over and it's been a pretty bruising affair... MTN was extremely unlucky that things panned out the way they did,” it said, adding thereafter talks turned sour with RCOM also.

However, the Business Day report noted that MTN “clearly has good prospects on its own”. “But it is also now a target. Having placed itself on the international stage, it will find alternative offers difficult to deflect. It may be that deal-making invol ving MTN has not in fact ended but just begun”, the Business Day report said.

The sad truth is that the image of Indian business practice and deal-making has taken a big hit. MTN also did not come out unscathed. Clearly, its due diligence in both negotiations was extremely lacking, otherwise it might have thought harder before entering discussions with either group,” it noted. - PTI

[Honest 836]

MTN seen eyeing Mexico after RCom talks fail

21 Jul, 2008, 1916 hrs IST, ET

JOHANNESBURG: South African mobile operator MTN Group may target Mexico's America Movil and other operators in India, Bangladesh and Pakistan in its bid to become a global player, analysts said on Monday.

On Friday MTN called off talks with India's Reliance Communications, aimed at creating a top-10 global telecoms group, saying they could not reach a deal. One analyst said MTN could look at America Movil, the largest mobile phone operator in Latin America, with operations in 16 countries in Latin America, the Caribbean and the US.

"We expect that Latin America could be the next big area of interest for MTN," Lindsey McDonald, ICT industry analyst at consultancy Frost & Sullivan, said. "Its market characteristics are similar to those of Africa, the mobile market has demonstrated robust growth, and there are operators present there that could be good targets or partners going forward. America Movil is one possibility."

Nozipho January-Bardill, MTN spokeswoman, said any link to America Movil was pure speculation. "People are beginning to guess and take shots," she said. "What we have said is that we are always going to continue to look at what we call value-enhancing opportunities. That process will not stop."

The failure to reach a deal with Reliance follows a decision in late May by India's leading mobile operator Bharti Airtel to end talks with MTN. Bharti said it called off the talks after MTN proposed a new structure that could have seen the Indian group becoming a unit of the South African-based group.

Rajay Ambekar, telecoms analyst at Cadiz African Harvest in Cape Town, said MTN would still try and make a go at the Indian market, adding that they may look at opportunities in Bangladesh, Pakistan and South America. "I think the key thing for MTN is India is a very attractive market, and it's no doubt its going to be difficult now (to enter the market)," said Ambekar.

He added there was only an outside chance MTN might try to revive talks with Bharti. MTN said last week it had made no attempt to talk to Bharti despite market talk. Furthermore, Ambekar said MTN would look at other ways to enter the Indian market through smaller mobile operators, but that process would not be easy.

India's top five mobile operators were unlikely to sell a majority stake to MTN, analysts said. They said there were many new licensees in India, who are yet to start operations and are looking for partners.

The top five are Bharti Airtel, Reliance Communications, Tata Communications, state-owned BSNL and Idea Cellular, which has recently bought smaller rival Spice.

By 1114 GMT shares in MTN traded 4.9 percent lower at 123.91 rand, while the JSE Securities Exchange's Top-40 index was 1.41 percent higher.

[Honest 836]

RCom, RIL shares surge; MTN slides

21 Jul 2008, 1901 hrs IST,PTI

MUMBAI: In first day of trade after talks for a possible merger between RCom and MTN failed, shares of the Anil Ambani group firm on Monday surged about 3 per cent here, while that of the South African telecom major plunged by over 6 per cent in Johannesburg.

Shares of Mukesh Ambani-led RIL also rose by nearly 2 per cent on Monday. Claiming first-right-of-refusal in the sale of a majority RCom stake, RIL had threatened legal action against the Anil Ambani firm and MTN if a potential deal breached its claim. RCom has been, however, contesting such claims.

After posting an intra-day gain of close to 5 per cent, RCom shares settled with a gain of 2.62 per cent at Rs 446.60 at the Bombay Stock Exchange.

Buying interest was seen in RCom shares as the end of the talks with MTN cleared the uncertainty over a possible deal caused by the threat of legal action from RIL as also the potential impact on the company's balance sheet in the event of a deal, brokers said. About 31.22 lakh RCom shares changed hands on the BSE.

However, the shareholders did not seem enthused by the collapse of talks in the South African firm MTN, whose shares dropped sharply by over 6 per cent in the morning trade on the Johannesburg Stock Exchange.

The MTN shares were trading at 123.60 rand down 5.14 per cent in the afternoon Trade at the JSE.

[Honest 836]

MTN may look at other Indian telcos: Reports

22 Jul, 2008, 1721 hrs IST, PTI

JOHANNESBURG: Speculations are rife in the local media about MTN's next move after the failure of talks with two Indian entities RCOM and Bharti Airtel for a possible merger, with some saying that the South African telecom major might now target other telecom operators from India.

Besides, MTN might pursue a potential deal with companies from other emerging markets in Latin America and Asian nations like Pakistan and Bangladesh, media reports said here.

The door is not yet shut on MTN in India as the country is "a huge market to walk away from," a report in financial daily Business Report said, quoting an analyst from research firm IDC.

The analyst added that "India had other small and regional operators that would make suitable targets for MTN."

MTN is likely to pursue other operators in India, after its talks with Reliance Communications (RCOM) to create a 70- billion dollar telecoms company were cancelled on Friday, Business Report said.

MTN began exclusive talks with billionaire Anil Ambani-led Reliance Communications in the last week of May after the South African firm's discussions with another Indian player Bharti Airtel fell apart.

However, RCOM and MTN called off their talks citing certain regulatory and legal issues last Friday.

Another South African financial daily Business Day quoted an MTN spokesperson as saying that "MTN will always look at what we call value-enhancing opportunities for shareholders and for the company, and that's what we will continue to do."

As part of our vision we want to be a leading provider of telecoms services in emerging markets," the spokesperson added.

[Honest 836]

The telecom jinx: Deals hit dead end

23 Jul, 2008, 0022 hrs IST, ET Bureau

MUMBAI: Reliance Communications’ failure in executing a multi-billion dollar deal with African telecommunications major MTN perhaps best explains the complications inherent to the sector. It is not the first time a deal in telecom has not fructified. In fact, the Indian wireless story has had more than its share of aborted attempts.

In mid-2001, the biggest story was the proposed merger of BPL Communications and Birla-Tata-AT&T (the latter would eventually be called Idea Cellular). At an enterprise value of over $2 billion, it was hugely significant. A couple of months later, things went awry and when BPL Communications’ shareholders cried foul over the deal, it was evident that the deal was not to be.

Unsurprisingly, it was called off and BPL Communications, a few years later, was sold to the Essar Group. Just a little later, barring the Mumbai circle, the operation was sold to Hutchison-Essar (before it was renamed Vodafone-Essar after it sold out to the British telco major).

The case of C Sivasankaran is equally interesting. His company, Aircel, for a long time, was considered to be among the most well-run telco operations in India. In 2004, he inked a deal with Hutchison-Essar to sell Aircel – it had a presence in Chennai and Tamil Nadu. Hutch was already present in Chennai and this deal was meant to be the first one at an intra-circle level. It was stymied by the government and never saw the light of day.

Sivasankaran, a while after that, agreed to sell 49 per cent in Aircel to Russian telco, Sistema. That also fell through. It was not until early 2006 that the deal to sell out to Malaysia’s Maxis finally went through. The plus point was that valuations too increased during that period. If the proposed deal with Hutch was at Rs 1,600 crore, the one with Maxis was at over Rs 4,000 crore.

“In a large deal, one has to go through many hurdles,” points out KPMG’s executive director (telecom), Romal Shetty. Referring to the Reliance Communications-MTN deal, he thinks there is a need to go global for wireless players given that there are pressures on the margins in India.

Without a doubt, this is one sector where a deal is never done till it’s actually done. In late 2004, Singapore Technologies Telemedia (STT) and Telekom Malaysia ™ agreed to acquire a 47.7 per cent stake in Idea Cellular. This was a combination of buying out AT&T Wireless’ holding in Idea apart from infusing fresh equity. The deal, like a lot others, failed to pass muster with the government and eventually, AT&T’s holding was split almost equally between two of Idea’s shareholders – the Tatas and the Birlas.

“Today, the situation is very different when compared to then. Look at the growth rates today, for instance,” points out Rajeev Gupta, MD & head of the India Buyout team at Carlyle. Even the government has not had it easy when it concerns telecom. Bharat Sanchar Nigam and Mahanagar Telephone Nigam were proposed to be merged. Various options were suggested and it seemed as if there was some serious activity on that front. Eventually, the proposal was placed on the backburner and nothing came of it.

As the story ends for the moment on the Reliance Communications-MTN deal, the scout for telecom assets globally will continue unabated. Issues related to regulation and valuation meanwhile will continue to be equally important. Interesting times ahead for sure.

[Honest 836]

MTN to decide on resumption of talks

25 Jul, 2008, 0045 hrs IST, ET

NEW DELHI: Bharti Airtel on Thursday said it was up to MTN to decide if it wanted to resume talks for a possible merger, even as the company refused to comment if it would redial the South African telco. “I cannot say if we will get into talks again.

At this point, everything is speculative. I would, therefore, like to stick to our company policy of no comments on speculations,” Bharti Airtel joint MD Akhil Gupta told ET. “Nothing has happened yet. It is speculative to say what will happen in future.”

Last week Reliance Communications and MTN had called off merger talks over legal and regulatory issues. MTN and Reliance had started talks after Bharti had called off talks with the South African telco citing differences over ownership and management.

ET had first reported on July 15 that MTN is learnt to have sent feelers to Bharti for reviving talks, if it fails to clinch a deal with Reliance Communications.