RComm, MTN in share-swap talks: Reports

09 June 2008

Mumbai: Anil Dhirubhai Ambani Group (ADAG) company Reliance Communications Ltd is reported to be in talks with South Africa's MTN, discussing an appropriate share swap ratio, that could potentially culminate in the formation of a global top-10 telecommunications entity.

A team from Reliance communications is reported to be in Johannesburg for the due diligence process, and is slated to be back in Mumbai on 10 June.

The two mobile service providers are believed to have reached major agreements on the broad contours of the deal that includes retaining the present management across most of their operating areas.

MTN is offering similar terms to Reliance as it was willing to give Bharti, which withdrew from talks over deviations from the agreed  term sheet before Relaince stepped in. These include a non executive chairmanship or co chairmanship for Ambani with MTN group president chief executive Phuthuma Nhelko continuing in the same capacity.

However, it is the ratio that is yet to be finalised.Over the past week Reliance Communications  and MTN have agreed to a cash-and-stock swap deal where MTN would hold around 74 per cent in Reliance Communications, with Reliance Communications chairman Anil Ambani emerging the single largest shareholder in the south African firm, holding around 34 per cent in the combined entity.

Anil Ambani is believed to be pushing for a ratio of 66 shares of MTN in exchange for every 100 shares of Reliance Communications. On the other hand, MTN would like to see a ratio of 51 shares of MTN exchanged for 100 shares of Reliance Communicaitons.