|
New Delhi: India's Reliance Communications' shares are expected to rise today after it called off tie-up talks with South Africa's MTN Group, avoiding a potential head-on legal clash between members of its founding Ambani family.
But analysts said stock market volatility ahead of a government confidence vote tomorrow would dictate the movement of shares of India's second-largest mobile operator, controlled by the younger of the feuding billionaire Ambani brothers, Anil.
Reliance Communications and MTN, sub-Saharan Africa's biggest mobile phone group, ended their exclusive talks late on Friday, aimed at creating a global top-10 telecom group, saying they could not reach a deal due to certain legal and regulatory issues.
"A deal is not happening, that will be bit of a relief for the shareholders," said Ambareesh Baliga, vice president at Karvy Stock Broking. "The stock should rise on Monday. But political issues will keep the market volatile."
The deal. which would have created a company valued at $66 billion had been complicated by a claim of right of first refusal on Reliance Communication's shares by the older Ambani, Mukesh, who runs Reliance Industries and had started arbitration proceedings last week.
Reliance Communication's stock has fallen 24 per cent since late May when the talks with MTN were first announced, with the bulk of the decline coming after the first refusal claim.
Split
The shares ended up four per cent on Friday, before the exclusive talks were called off, with analysts split on whether a deal could be struck before the exclusivity lapsed on July 21.
Stock markets, are however, expected to focus on political uncertainty.
India's government faces a vote of confidence tomorrow after its communist allies withdrew support over a nuclear deal with the US. A regional party has stepped in to replace the communists but analysts say the vote is still too close to call.
A deal with MTN would have created an emerging markets telecoms giant with operations in about two dozen countries and around 120 million subscribers.
The failure to reach a deal with Reliance came after India's leading mobile operator Bharti Airtel decided in late May to end talks with MTN. Bharti said it had called off the talks after MTN proposed a new structure that would have seen the Indian group becoming a unit of the South African-based group.
In an e-mail over the weekend, a Reliance Communications spokesman said Anil Ambani investment vehicle AAA Com, which holds 63.4 per cent in Reliance Communications, reserved the right to claim "direct and consequential damages" from Reliance Industries.
|
