Reliance enters MTN takeover fray

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."

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