'RIL wants to derail talks'

RCOM said on Monday that RIL's reaction showed that its “sole objective is to derail talks with MTN and frustrate a possible combination”. RIL, on its part, did not offer any comments either on the developments or on what RCOM had to say about it.

Meanwhile, a British financial daily carried a report quoting “a person familiar with the talks” between MTN and RCOM and suggested that the South African firm is considering walking away from the deal, fearing legal action if it goes through.

RCOM sources and media reports maintain that talks with MTN are on and it could be close to a deal. RCOM currently serves 48 million subscribers in India, while MTN serves over 68 million subscribers across 21 countries, and the union — if it does happen — would lead to the creation of one of the world's largest telecom companies serving nearly 116 million customers. RCOM had informed stock exchanges on May 26 that it had entered into exclusive negotiations with the MTN Group for a period of 45 days, for a potential combination of their businesses.

Thereafter, on June 13, news trickled out that RIL, which had reluctantly given up the telecommunications business when the brothers parted ways, had written to the MTN board informing them about a clause in the family settlement reserving the first right of refusal for Mukesh Ambani or his companies in the event RCOM decided to sell a company. According to them, this gives RIL up to four months to decide in favour of or against any deal, which poses a huge roadblock.

Shortly after RIL's letter, a Dow Jones report quoted an MTN official as saying that while the two firms were still talking, the feud between the two brothers may derail the deal. Last week, RCOM's stock fell. MTN's attempts at hooking up with a telecom player in India have been hit with controversies from the very start. MTN first engaged in a month-long discussion with the Bharti group.

Bharti was reportedly willing to pay $50-60 billion for the company, but talks broke off when MTN insisted that Bharti become its subsidiary. Temasek is learned to have been uncomfortable with the management structure — effect of structure on minority shareholder rights.