And the Reliance - MTN Saga continues…
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It’s been touted as the mother of all deals in the Indian telecom industry. But it looks like mother Kokilaben might soon need to step in to calm the two warring factions. Yes people.. I am talking [rather blogging] about the RCOM-MTN deal.
In a dramatic twist in the tale of Reliance Communications-MTN merger story [will give even the Saas-Bahu soap operas a run for their monies], Reliance Industries wrote to the MTN board pointing out that it has the right of first refusal over a sale of controlling stake in Reliance Communications. Now, what this means is, it would make any sale of controlling stake in the Anil Ambani-owned Reliance Communications to anyone but Mukesh Ambani-owned Reliance Industries illegal. Seems like Ambani senior is unable to let go off RCOM – not difficult to comprehend given that it was his pet project and had nurtured it himself in the initial days. And according to the Mukesh camp, any majority stake sale should be informed to all settlement parties.
Now this has further infuriated the ADAG group. RCOM has said that RIL’s right of first refusal claim is legally and factually untenable, baseless, and misconceived. Not to be stopped at this alone, it has further gone on to say,” RIL’s action is anti-consumer, anti-investor, and anti-globalisation. It has made a malafide attempt to disrupt Reliance Communications - MTN talks”
The intense heat that this merger has generated is quiet understandable when one takes a closer look at the numbers involved. MTN has over 68 million subscribers across 22 countries, while RCom has around 40 million users in India. The merged entity will be a mammoth $70 billion global telecom giant, with over 116 million subscribers stretching from Asia to the Middle East and Africa. A senior ADAG executive further threw light on the issue by saying that,” What is hurting RIL is that if the deal goes through, EBITDA of the combined RCOM and MTN for 2009 would be Rs 45,000 crore, 50% more than RIL’s EBITDA of Rs 30,000 crore.” It is already a well known fact by now that both the brothers are engaged in a bid to become the richest Indian [ atleast that’s what I feel and so do most others]. And this incident has further added fuel to the fire.
Meanwhile a team of South African telecom giant MTN’s officials has quietly landed in India for talks with Reliance Communications on the deal. It seems that MTN team has come over as a part of some due diligence process.
Looks like the Reliance guns would be blazing for some time now.
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It is really sad that Mukesh Ambani is trying to derail this deal.
The claims made by Reliance Industries Limited are baseless and were based on an agreement in 2006, which was signed only by Reliance Industries officials and was later overturned by the Bombay High Court.
This deal would would create one of the world’s largest emerging-markets telecom operators with 115m subscribers spread across Africa, India and the Middle East which is why Mukesh is scared.