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RCom In 45-Day Exclusive Talks With MTN; Not Merger, Not Acquisition?

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Looks like it’s a swayamvar for MTN, right? After negotiations with Bharti-Airtel broke down, it appears that MTN is now in talks with Reliance Communications. RCom has informed (pdf)the BSE that the ADA Group telco has entered into exclusive negotiations for a period of upto 45 days, for “a potential combination of their businesses”. Sounds like they’re in talks for a possible merger, like was the case with Bharti, but strangely, CNBC-TV18 reports, quoting sources, that they’re not discussing either merger or acquisition. Then, what? A possible joint venture?

Readers will remember that Bharti Airtel pulled out of talks when MTN proposed a structure under which Bharti Airtel would become a subsidiary of MTN — quite frankly, a proposal that appears to be intended to be a dealbreaker. Now RCom has stepped in where Bharti had left off. Will be interesting to see how they’re dealing with this situation, since there’s reportedly political pressure for MTN to remain in African hands. In the meantime, the markets have reacted positively to Bharti deciding to pull out, and negatively to RCom entering into talks with MTN; big ticket deals mean a significant investment – whether in locking up existing resources, or raising debt: