Bid for MTN: Now, Anil Ambani calls
Anil Ambani's Reliance Comm has begun talks with the MTN Group, days after rival Bharti Airtel pulled out negotiating a possible merger with South African company. HT Correspondent reports.india Updated: May 26, 2008 23:20 IST
Anil Ambani's Reliance Communications Ltd. has begun talks with the MTN Group, days after rival Bharti Airtel pulled out negotiating a possible merger with South African mobile phone company.
Both parties have entered into exclusive negotiations for a period of 45 days. The talks would be related to a potential combination of their businesses, both companies said in separate statements issued on Monday.
“The partnership will provide investors, customers and the people of both companies a unique and global platform for exponential growth,” the Reliance Communications statement quoted Anil Ambani as saying.
A successful merger would create a telecom behemoth with 115 million customers spanning across nearly two dozen countries and a combined annual revenue in excess of $14 billion.
Analysts say Reliance has got enough flexibility to go for a merger, but the deal would be a tough call and would be negative for its shares in the short term.
“It would be a tough call. MTN is not in favour of giving away the majority control. But, Ambanis are aggressive buyers. However, this would be negative for R-Com stock due to the potential debt to the tune of $60 billion,” said Dev Kapadia, analyst with Mumbai-based brokerage firm, Lalkar Securities.
On Saturday, Bharti said it had pulled out of the talks because it saw MTN's merger proposal as "convoluted way" of gaining control of the Indian company.