Reliance Communications Ltd said on Monday that it has entered into exclusive negotiations with MTN Group, after bigger rival Bharti Airtel said at the weekend it had ended takeover talks with the South African firm.
"Reliance Communications and MTN Group have agreed to enter into exclusive negotiations with respect to a potential combination of their businesses," Reliance Communications said in a statement. The two firms, which are in negotiations, have agreed to an exclusivity period of 45 days, the statement said.
"We are … in exclusive negotiations to achieve a partnership, which would provide investors, customers and the people of both companies a global platform for exponential growth," Chairman Anil Ambani said in the statement.
Bharti Airtel on Saturday said it had called off talks after MTN proposed a new structure which it said would have seen the Indian firm becoming a unit of MTN. The two groups had hoped to create the world’s sixth-largest mobile operator with more than 130 million subscribers in about two dozen countries.
Analysts said the news was likely to weigh on shares of Reliance Communications.
"The reason investors didn’t like talk of the Bharti-MTN deal was the price, and 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," said Arun Kejriwal at investment advisory KRIS.
Media and analysts had speculated that Bharti was eyeing a 51 per cent stake in MTN or engineer their merger in a deal that would value MTN at up to $50 billion.