As talks between the Reliance Anil Dhirubhai Ambani Group (RADAG) and South Africa-based telecom major MTN continued, the controversy over the control of shares of the Indian entity held by the promoters surfaced once again.
The talks are being held for a possible consolidation of two entities - MTN and RADAG-controlled Reliance Communications, which was carved out after a split between one of India's best-known business families.
While Reliance Industries Ltd (RIL) is controlled by elder brother Mukesh, his younger sibling Anil Ambani has control over the RADAG group, with interests in telecom, energy and entertainment.
Both brothers, now estranged, are part of the elite Forbes rich list.
The Anil Ambani group claimed Sunday that the elder brother's group was evading the fact that the family pact of Jan 12, 2006 was signed by officials of RIL, and that too illegally.
The RADAG group also said the claim was immediately rejected the same day - a matter that has been contested by his brother's company.
South Africa's MTN had Saturday said its tie-up talks with Reliance Communications were still on, barely hours after the Anil Ambani-led group charged a rival corporate house with trying to derail the negotiations.
“As far as we are concerned, we have a 45-day exclusive talks agreement with Reliance Communications and nothing has really changed from our statement on May 26,” MTN spokesperson Nozipho January-Bardill told IANS here.
The comments came in the wake of a letter to MTN from Reliance Industries, led by Mukesh Ambani, saying that under a family pact between them, his group had the first right of refusal to buy controlling stake in Reliance Communications.
But Reliance Communications, which has also threatened legal action against the Mukesh Ambani-led group, has refuted the claim.
Soon after Reliance Communications issued the statement, a spokesperson for the Mukesh Ambani-led group said its letter to MTN was issued in good faith and was merely stating the contents of the agreement reached in January 2006.
“RIL has in good faith notified both Anil Dhirubhai Ambani Group and MTN group of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG,” a Reliance Industries spokesman said.
But the statement by the Anil Ambani group said Reliance Industries based its claim on the Jan 12, 2006 agreement that was unilaterally signed only by RIL officials and found to be “unfair and unjust” by the Bombay High Court Oct 26.
Reliance Communications and MTN had said May 26 that they were in talks for a “possible combination of their business” just days after Bharti Airtel, India's largest private telecom company, ended merger talks with the South African firm.
The group said the two entities had also agreed upon a 45-day exclusivity period to work out the modalities, during which neither party would negotiate with any other entity.
Reliance Communications has been attracted by MTN's 70 million customers in 21 countries, including South Africa, Nigeria, Iran and Cyprus and its impressive balance sheet, which shows a net profit of $1.58 billion on revenues of $9.62 billion.
And for the South African company, a consolidation will result in access to 48 million customers of Reliance Communications, covering 15,000 towns and 400,000 villages in India on a network of 165,000 km of optic fibre cables.