South Africa
South Africa’s MTN Group (MTNJ.J: Quote, Profile, Research) has started talks with Indian mobile operator Reliance Communications (RLCM.BO: Quote, Profile, Research) that could create a $66 billion emerging markets telecoms group.
Indian number two Reliance quickly stepped into the void after bigger rival Bharti Airtel (BRTI.BO: Quote, Profile, Research) pulled out of talks with MTN at the weekend aimed at taking control of sub-Saharan Africa’s biggest mobile operator.
A combination of MTN, valued at $38 billion at Friday’s close, and Reliance, valued at $28 billion, would create a top ten global industry player to rival Japan’s NTT DoCoMo Inc (9437.T: Quote, Profile, Research) in market value. In terms of subscribers, a merged group would slot in just below Deutsche Telekom (DTEGn.DE: Quote, Profile, Research) — as the seventh biggest in the world..
A source with knowledge of the negotiations said Reliance would not be looking for the same structure as Bharti in the deal. Media and analysts had speculated that Bharti was eyeing a 51 percent stake in MTN and Bharti said it had pulled out of talks after the South African firm suggested it become an MTN subsidiary.
Shares in Reliance fell as investors worried about the costs of a deal while MTN stock fell as much as 7.6 percent http://abc-cashadvance.com pay day loans. Investors were expecting a healthy premium from a Bharti buyout.
MTN is seeking new markets outside Africa and the Middle East and will likely push to retain its brand and culture.
“Whatever the shape of the company moving forward, there is little doubt that the retention of the MTN brand and culture would be two of the most important aspects executive management and shareholders should ensure,” Frost & Sullivan analyst Lindsey Mc Donald said.
Reliance Communications and MTN said earlier that the two groups had entered into exclusive talks about potentially combining their businesses. A 45-day exclusivity period will be in force, during which neither can talk to any other entity.
Filed under: technology by John