New Delhi: The spat between Mukesh Ambani’s Reliance Industries Ltd (RIL) and his estranged younger brother Anil Ambani’s Reliance Communications Ltd, or RCom, escalated a day before the end of the phone firm’s exclusive merger talks with Africa’s MTN Group Ltd. The two Indian companies hinted at legal action against each other.
RCom, India’s second largest mobile phone services firm, and MTN are in merger talks to create a phone company with networks stretching from South Africa to India. The exclusive nature of the 45-day-long negotiations expires on Tuesday.
RIL claims the first right of refusal on RCom shares in line with an early 2006 agreement detailing the split of the business founded by Dhirubhai Ambani, the late father of the feuding brothers. RCom calls this claim “legally untenable”.
A file photo of brothers Anil Ambani (left) and Mukesh Ambani (Photo by: Arko Datta/Reuters)
Senior RIL executives, India’s biggest private enterprise, arrived in the morning at the venue of a meeting it had proposed last Wednesday, the company said in a statement, for conciliation talks but the meeting didn’t take place as RCom representatives failed to turn up.
A spokesman for RCom declined to comment.
“In view of the refusal of RCom to participate” in Monday’s proposed meeting, RIL “is left with no alternative but to adopt appropriate proceedings against RCom, as advised,” the Mukesh Ambani firm added.
In an evening statement, RCom countered that RIL had rejected its offer to hold talks next week. “RCom has written to RIL offering to meet RIL in the week of 14 July to clarify any doubts. There is neither any ‘dispute’ nor occasion for ‘conciliation’ process,” RCom said.
RCom, which added that RIL had written a third letter threatening legal action, said it, too, reserves the right to take all action “as legally advised”.
On Monday, shares of RCom closed down 4.2% at Rs419.80 each, while RIL shares ended at Rs2,028.15 each, weaker by 3.38%. The Bombay Stock Exchange’s benchmark index gained 0.54%.
When contacted on whether MTN will extend the exclusivity of its talks with RCom, a spokeswoman for the Johannesburg-based company said it does not wish to comment on speculation.
On Monday, London’s Financial Times daily reported that MTN is considering quitting talks with RCom over fears of legal challenges from Mukesh Ambani. It did not identify the source of the information.