The Hindu Business Line : Deadline for RCom, MTN talks extended till July 21

Snapshot
The earlier deadline came to an end on Tuesday
MTN appoints Avian Media as its PR agency for India
RCom, MTN tell bourses that there is ‘no certainty on completion’

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Mumbai, July 9 Reliance Communications said on Wednesday that the deadline for the talks with South African telecom major MTN for a “potential business combination” has been extended till July 21.

The announcement comes a day after the 45-day period, which began in May, ended on Tuesday.

The extended deadline will give RCom extra time to resolve its deal-threatening conflict with Reliance Industries (RIL), according to Mr Sourabh Kaushal, Principal Consultant, Frost & Sullivan.

Meanwhile, MTN has appointed Avian Media as its PR agency for India, which, according to some analysts, is a sign that the sub-Sahara operator is serious about an Indian partner.

However, in the statement issued today, both RCom and MTN told their respective bourses that “there is no certainty either on completion, or the timing of the said proposal.” Analysts view this as a message of caution to investors.

An extension of time in itself is a sign that the talks did not go through as planned; the short exclusivity period might be an indication that MTN’s patience is running out, a senior industry analyst said.

The Anil Ambani-controlled RCom entered the fray after Bharti Airtel’s plan to pick up a stake in MTN failed. However, in early June, Mr Mukesh Ambani threw a spanner in RCom’s works, by claiming that his company, RIL, had the first right of refusal if there were a stake sale of RCom. RIL based its contention on an agreement dated January 12, 2006.

Though RCom has vehemently rejected RIL’s claims, sources said that RCom has been studying various alternatives so that the right of first refusal might not be invoked.

One of the options at this stage is for RCom to pick up some stake in MTN directly, and scale it up after the January 12, 2006 agreement with RIL expires.

However, analysts are sceptical about MTN agreeing to such a deal.