MTN-RCOM deal in snag (India)The Ambani Feud is again knocking the headline with the issue of RCOM (Reliance Communication) striking a merger/takeover deal with South African telecom giant MTN. Reliance Industries (RIL), controlled by Mukesh Ambani, has initiated arbitration proceedings against Reliance Communications (RCOM) owned by his younger brother Anil Ambani. RCOM has slammed the move saying, “It’s legally and factually unwarranted”.
“RIL has commenced arbitration proceedings by nominating Justice B P Jeevan Reddy, a former judge of the Supreme Court of India as an arbitrator for resolution of the disputes,” an RIL spokesperson said. RCOM has refused to participate in the conciliation meetings under the alternate dispute resolution provisions contained in the non-competition agreement, the RIL official said .
RIL had offered to talk with RCom on July 7 for a “mutual reconciliation”. RCOM, however, did not turn up for the talks. Later RCOM offered to meet RIL in the week of July 14 but maintained that this was not intended towards any “dispute” or occasion for “conciliation” process but “to clarify any doubts”. This was not acceptable to RIL.
In the meantime, RCOM and MTN extended the 45-day exclusivity period by another two weeks till July 21. According to media reports, MTN, sub-Saharan Africa’s top mobile operator, was nervous about entering a deal with a legal cloud over it and has looked at ways to restructure a transaction. RIL’s contention is that it has the first right of refusal whenever RCOM decides to sell the equity stake. However, this was countered by RCOM which says that the contentious non-competition agreement was signed by RIL and RCOM when the latter was controlled by RIL chief Mukesh Ambani in a one-sided deal. “RIL’s claim is simply an excuse to try and disrupt the creation of one of the world’s most valuable telecom combinations, with a unique footprint covering the emerging growth markets of India, Africa and the Middle East,” RCOM had earlier said.
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