Mumbai: Anil Ambani, chairman of Reliance Communications Ltd, or RCom, India’s second largest mobile phone services firm by customers, which is in merger talks with Africa’s leading phone operator MTN Group Ltd, may use his personal wealth to buy additional stake in the Johannesburg-headed firm, a person familiar with the deal said.
He will buy stake through AAA Ventures Ltd, the holding company through which he controls the Reliance-Anil Dhirubhai Ambani Group of firms. The equity thus acquired will be in addition to the stake that will accrue to Ambani through a share swap between MTN and RCom if the talks are successful and which will anyway see him emerge the biggest shareholder in the combined entity.
An RCom spokesman declined comment on the plan.
Ambani’s exact holding in the merged entity—he controls about two-thirds of RCom— will be firmed up only after both companies agree on details such as share swap ratio, this person, who did not wish to be identified, added.
MTN is valued at some $35.66 billion or Rs1.5 trillion by market capitalization, about one-eighth less than its peak valuation last month when it was engaged in merger talks with RCom’s bigger rival Bharti Airtel Ltd. RCom’s value on the bourses is $27.1 billion.
As the talks progress, the two sides plan to speed up due diligence, a financial term for studying accounts and operations of a company, by setting up a “virtual data room”, the person said. A team representing MTN has started due diligence on RCom, Mint had first reported on Thursday.
MTN is advised by Deutsche Bank AG and Merrill Lynch South Africa (Pty) Ltd and has hired Cleary Gottlieb Steen and Hamilton, a New York law firm. Trade publication Euroweek has reported that Bank of America is representing RCom, but this could not be independently verified.
Separately, shares of Telkom South Africa Ltd, Africa’s largest fixed-line phone firm, rose 8.4% after it received a takeover offer from Mvelaphanda Holdings Ltd, and a separate bid from equal partner Vodafone Group Plc. for its 50% stake in Vodacom Group Ltd.