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| | | Tuesday July 8, 03:16 AM
RIL-RComm spat intensifies on the eve of deadline for MTN talks
By Corporate Bureau
The spat between the Ambani brothers on the proposed merger between Reliance Communications (RComm) and South African firm MTN showed no signs of abatement, even as the July 8 deadline for the exclusive talks between the telecom majors drew near.
Reliance Industries Ltd (RIL), owned by RComm chairman Anil Ambani's elder brother Mukesh, whose letter to MTN had raised concerns on the deal citing a first right of refusal clause, said it had offered to talk with RComm on Monday, July 7, for a "mutual reconciliation". RComm, however, did not turn up for the talks. RIL, therefore, "is left with no alternative but to adopt appropriate proceedings against RCom", an RIL spokesperson said on Monday.
However, earlier in the day, RComm sources said the company intends to meet RIL in the week of July 14. Sources also clarified that the meeting is not intended towards any "dispute" or an occasion for "conciliation", but "to clarify any doubts".
RIL, however, blamed RComm for the breakdown in talks for mutual reconciliation between the two companies. Late on Monday evening, an RIL spokesperson stated that the company, on July 2, had invited RComm to participate in a meeting scheduled at 11 am on July 7, "to commence the process of mutual conciliation under the non-competition agreement".
However, no representative of RComm turned up at the meeting. RIL, then, delivered a letter to RComm at 1.49 pm, placing on record the fact that no representative of RComm turned up at the venue for the meeting at the scheduled time. "RIL received a response from RComm at 2.23 pm refusing to participate in the meeting. This was after RIL had already delivered the above letter."
"In view of the refusal of RComm to participate in (the) conciliation process as envisaged in the agreement, RIL is left with no alternative but to adopt appropriate proceedings against RComm, as advised," the spokesperson said, adding, "RIL has already demonstrated its willingness to participate in any meeting as part of conciliation process by inviting RComm for a meeting, which RComm did not attend."
RIL has sent its reply to RComm's response, and reiterated that it has invoked the dispute resolution clause of the non-competition agreement.
After RComm began its 45-day exclusive talks with MTN, RIL had come forward and claimed to have a first right of refusal on RComm's shares. Various media reports have stated that the potential legal challenge was aimed at pressurising MTN into quitting talks for RComm's shares. However, there has been no communication from either company on the matter.
On Monday, Reliance Communications shares were down by 4.2% on the BSE to close at Rs. 419.80. As reported by FE earlier, RComm shares have lost as much as 48.84% since its discussions with MTN commenced in May to create the world's seventh-largest telecom giant.
According to media reports, MTN, sub-Saharan Africa's top mobile operator, is nervous about entering a deal with a legal cloud over it and has looked at ways to restructure a transaction. "The discussions had initially focused on a takeover of Reliance by MTN, but now the companies are weighing the reverse--a takeover of MTN by Reliance," reports added.
Meanwhile, sources said that the exclusive period for negotiations on the proposed deal with MTN has been extended by another two to three weeks, but this could not be independently confirmed. However, with the battle between the brothers taking centre-stage, the proposed MTN deal is likely to be delayed for a while.
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