At the end of May, when the board of the South African telecom major MTN was discussing terms with Bharti Airtel, news emerged that the Anil Ambani controlled Reliance Communications (R-Comm) had been in touch with MTN. What followed was the breakdown of talks between Sunil Mittal’s Airtel and MTN, since it appeared that RComm was more agreeable to the nationalistic MTN’s board’s concept of a reverse takeover.However, there is a twist in the tale, and the twist has nothing to do with the reluctant bride, MTN. Rather, Mukesh Ambani’s Reliance Industries Limited (RIL) claims that as per the agreement when the brothers split the group’s assets between them, RIL had the right of first refusal in the case of any proposed sale of a controlling stake in R-Comm. The transaction with the South African telecom major is expected to involve a convoluted sale of R-Comm shares to MTN, with the Reliance Anil Dhirubhai Ambani Group (R-ADAG) buying into MTN, making R-Comm a subsidiary of MTN.
R-ADAG officials are not convinced about the right of first refusal. RIL of course is, and in a crisp but hardly clear statement to the media said: “RIL has in good faith notified both Anil Dhirubhai Ambani Group and MTN Group of the stipulations contained in an agreement, the validity of which has never been questioned so far by R-ADAG.” R-ADAG officials, on their part, believe that RIL is trying to scupper this mother of all transactions.
This, of course, isn’t the first time the brothers have clashed after ostensibly agreeing to go their own ways. They are still locked in a dispute regarding gas from RIL’s Krishna-Godavari basin platforms. R-ADAG needs the gas from the basin to power the massive 7,500 MW electricity plant at Dadri near Delhi.