STOCKWATCH Reliance Communications up after merger talks with MTN collapse
MUMBAI, Jul 21, 2008 (Thomson Financial via COMTEX) -- By Staff Reporter
Company: MTN Group Ltd. (MTNOF)
Shares in India's second-largest mobile telecommunications company Reliance Communications Ltd. (RCom) were up today, as it called off its merger plans with South African mobile operator MTN Group after trading hours on Friday.
At 2.10 p.m. local time, RCom was up 3.29 pct at 449.50 rupees on the Bombay Stock Exchange, the BSE's benchmark Sensex was up 136.83 points at 13,772.23 and the S&P CNX Nifty was up 0.85 percent at 4,126.90.
Late on Friday RCom said it is unable to conclude its proposed $66 billion merger with South Africa's mobile operator MTN Group Ltd., "owing to certain legal and regulatory issues".
RCom said the two parties mutually decided to call off talks and allow the "exclusivity agreement" to lapse.
On May 26 Anil Ambani-controlled RCom had entered exclusive talks to combine with MTN to build a telecom giant that would span Asia, Africa and the Middle East with a market capitalisation of up to $70 billion.
On July 9 the companies decided to extend the period of exclusivity for their potential merger talks until July 21.
The roadblock created by Reliance Industries Ltd. (RIL), which is controlled by Anil Ambani's elder brother Mukesh Ambani is believed to be the key reason behind the deal being called off.
RIL has been seeking to block the deal, claiming first right of refusal to buy controlling stake in RCom, based on an agreement dated January 2006.
Last week RIL issued a fourth letter threatening legal action against RCom, which said the notice was "legally and factually unwarranted".
"We do not believe this to be a major negative factor for RCom, as it is now 'business as usual' for the telco, given the huge growth potential still present in India," said Harit Shah, a research analyst with Angel Broking.
"However, the company's global ambitions may have to take a back-seat in the short-term," he added. TFN.newsdesk@thomsonreuters.com ami/alo/jfr
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Company: MTN Group Ltd. (MTNOF)
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