Page last updated at 06:02 GMT, Monday, 26 May 2008 07:02 UK

Reliance enters MTN takeover fray

Indian woman holding mobile phone
Bharti wants to expand beyond the Indian mobile phone market

India's Reliance Communications is now in talks with South African mobile phone firm MTN about a deal just hours after rival Bharti Airtel pulled out.

Bharti broke off talks with MTN after the two companies failed to agree on the structure of the combined entity.

A tie-up would have created the world's sixth-largest mobile phone operator with more than 130 million subscribers.

Reliance has now entered into exclusive negotiations with MTN but it warned that a deal was by no means certain.

'Exponential growth'

However, Reliance chairman Shri Anil Dhirubhai Ambani said he was keen to develop a partnership to "provide investors, customers and the people of both companies a unique and global platform for exponential growth".

Indian firms are targeting sub-Saharan Africa since it is one of the world's fastest-growing markets for wireless services and MTN is the biggest operator in that market.

Analysts said the proposed Bharti deal would have valued MTN at about $50bn.

Reliance Communications will have to pay a price that is at least equal to, or higher than what was being talked about for Bharti
Arun Kejriwal, investment adviser

Bharti had secured funding of more than $60bn (30.3bn) towards a deal but walked away amid claims that MTN had changed the terms of the deal.

It said MTN's plans would have seen Bharti Airtel become a subsidiary of MTN, a position that it was not willing to accept.

But analysts said it was far from certain that Reliance would be able to negotiate a deal with MTN which its own shareholders could support.

"The reason investors didn't like talk of the Bharti-MTN deal was the price," said Arun Kejriwal, from investment advisers Kris.

"Now Reliance Communications will have to pay a price that is at least equal to, or higher than what was being talked about for Bharti."




SEE ALSO
Bharti ends tie-up talks with MTN
25 May 08 |  Business
Telecom boom boosts Bharti Airtel
23 Jan 07 |  Business
Bharti African talks 'continue'
16 May 08 |  Business

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