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Congress pushes for Ambani truce

Congress pushes for Ambani truce
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First Published: Thu, Jul 10 2008. 01 04 AM IST
Updated: Thu, Jul 10 2008. 01 04 AM IST
Mumbai / New Delhi: The bitter feud between estranged billionaire brothers Mukesh Ambani and Anil Ambani, which has ratcheted over the last few weeks with the younger sibling’s interest in merging his phone firm Reliance Communications Ltd, or RCom, with Africa’s MTN Group Ltd, has attracted New Delhi’s attention.
The uppermost offices of the ruling Congress party, the dominant constituent of the ruling United Progressive Alliance government which faces a vote of confidence in Parliament in the coming weeks, has asked both sides for a meeting to thrash out differences, two politicians close to the matter said. While both asked not to be identified and declined details such as the timing for the meeting and whether the brothers themselves had been asked to attend, one of them, a cabinet minister, said: “The meeting might (indeed) happen.”
Anil Ambani, who runs his business from Mumbai, was in New Delhi on Wednesday and met external affairs minister Pranab Mukherjee, a Congress functionary said on the condition of anonymity. The agenda at the meeting or what was discussed could not be immediately ascertained. Mukherjee’s office denied the meeting.
/Content/Videos/2008-07-10/0907 Josey on Rcomm_MINT_TV.flv
The patch-up move was not confirmed by executives of either Mukesh Ambani-chaired Reliance Industries Ltd, India’s largest business enterprise, or Reliance Communications. Both sides said they had no knowledge of such a plan.
According to rumours that buzzed through political circles on Wednesday, the meeting was sought by Congress president Sonia Gandhi’s political secretary Ahmed Patel. This could not be verified independently by Mint; calls to Patel’s office for comment were not returned.
Patel is a Congress lawmaker hailing from Bharuch in Gujarat, home to Mukesh Ambani-chaired Reliance Industries Ltd’s refinery and petrochemicals factories.
The proposed meeting comes at a time when the Samajwadi Party has said it will lend support to the Congress party in Parliament after the ruling alliance lost the support of key ally the Left Front over a nuclear deal with the US. The Left Front withdrew support on Tuesday.
The Mulayam Singh Yadav-Amar Singh-led SP has long been considered close to Anil Ambani.
Earlier in the day, both MTN, Africa’s biggest phone firm, and RCom, India’s second largest mobile phone services company, said they had decided to extend their exclusive merger talks until 21 July.
If the merger discussions are successful, it will help create a mobile-phone operator having at least 116 million subscribers. Both companies’ shares have slumped since Mukesh Ambani’s Reliance Industries in June said it may block any deal which doesn’t give it a first chance to buy a stake in RCom. Ambani has also threatened legal action.
RCom and Johannesburg-based MTN said on 26 May they were in discussions, for a 45-day period, to combine their businesses. This period expired on Tuesday.
“This (extension) shows they are seeking more time to arrive at a deal structure that will withstand legal scrutiny,” said Harit Shah, an analyst at Angel Broking Ltd in Mumbai. Shah rates RCom a “buy.”
RCom’s interest in MTN began immediately after Bharti Airtel Ltd, India’s largest mobile-phone provider, said on 24 May it failed to reach a deal with MTN after the South African carrier wanted Bharti to become its subsidiary.
Anil Ambani is the world’s sixth richest man, with a personal fortune of $42 billion, according to Forbes magazine. Mukesh Ambani is ranked fifth. The brothers split the Reliance group in 2006.
The siblings are already locked in a legal battle over the pricing of gas. An Indian court is hearing the dispute between Anil Ambani’s Reliance Natural Resources Ltd and Reliance Industries, which wants higher prices and more customers than previously agreed for the gas it is drilling at the Krishna- Godavari basin, off the eastern coast of the Indian peninsula.
Shares of RCom and MTN rose sharply. RCom shares settled nearly 6% up at Rs440.95 each on the Bombay Stock Exchange.
MTN shares rose more than 1% to 129.9 rand (South African currency) in mid-day trades at the Johannesburg Stock Exchange.
Bloomberg’s Harichandan Arakali and Carli Lourens and PTI contributed to this story.
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First Published: Thu, Jul 10 2008. 01 04 AM IST
More Topics: Video story | Mukesh Ambani | Anil Ambani | RCom | MTN |