By IANS,
Mumbai : The Anil Ambani-controlled Reliance Communication (RCom) and South African telecom major MTN Wednesday said the period of exclusive talks for a possible merger has been extended till July 21.
“RCom and MTN have agreed to continue their negotiations in relation to such potential business combination, and have extended the period of exclusivity until July 21, 2008,” an RCom statement said.
“It is to be noted that there is no certainty either on completion or the timing of the said proposal,” the statement added.
The extension gives a fresh lease of life to Ambani’s aim of emerging as a major global telecom player.
MTN and RCom, India’s second biggest mobile operator, have been locked in exclusive merger negotiations for 45 days that ended Tuesday. If successful, the talks would net the merged entity with more than 116 million mobile subscribers across India, West Asia and Africa.
The two companies had announced May 26 they had entered into exclusive negotiations for a potential business combination. The merged entity is estimated to be worth about $70 billion, with Ambani at its helm.
MTN started negotiations with RCom after talks with another Indian firm, Bharti Telecom, India’s largest mobile operator, collapsed.
But subsequently Reliance Industries (RIL), headed by Anil Ambani’s elder brother Mukesh Ambani, contested the negotiations, saying under a family pact signed between the two brothers early January 2006, RIL had the first right of refusal to buy controlling stake in RCom should they be sold.
Reliance Anil Dhirubhai Ambani Group (R-ADAG), RCom’s holding company, has consistently contested this claim.
Before the Ambani brothers formally split in 2006, RCom was under the control of Mukesh Ambani, but along with Reliance Energy, was given to Anil Ambani as part of the settlement between the brothers.
Even as the war of words between the Ambani brothers raged over MTN, RCom shares hit a 52-week low July 3, goading R-ADAG to approach market watchdog Securities and Exchange Board of India for a probe.
The company’s market capitalisation has also dropped by almost a third to $18 billion after consolidation talks began with MTN.
However, following Wednesday’s announcement, shares of RCom was up by 6.52 percent from its previous close, and was trading at Rs.442.5.