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MTN may walk out of RCOM deal if Ambani feud continues

  1. #1
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    Post MTN may walk out of RCOM deal if Ambani feud continues

    MTN may walk out of RCOM deal if Ambani feud continues
    MTN's tolerance may be running out for a possible $70-billion deal with Anil Ambani-led Reliance Communication, with local media speculating that the South African telecom major's CEO may walk out if the dispute between the Ambani brothers is not settled soon.

    "MTN is an operator with a low tolerance level. It comes from the top, with CEO Phuthuma Nhleko handing out brusque replies if someone poses a question he thinks is gormless," a media report said on Thursday.

    While noting that elder Ambani sibling Mukesh-led Reliance Industries' claim to first right of refusal to sale of a stake in RCOM is threatening to sink a deal between RCOM and MTN, the report said that "the validity of the claim may never be tested, as there's a high chance MTN's tolerance threshold will expire first."

    "The no-nonsense attitude was also displayed in Benin, when the government tried to extract $52 million in spurious backdated fees to let MTN keep operating. Nhleko silenced the network for two months rather than capitulate. His gamble paid off, with President Thabo Mbeki persuading Benin to ease those demands," the report said.

    The report further said that the "lesson is never play poker with Phuthuma and his henchmen. Which is almost what India's warring Ambani brothers are doing."

    The report noted that "Nhleko will have little patience in dealing with two brothers whose egos are as big as their businesses. Particularly when MTN is a third party caught in the crossfire of an undignified sibling squabble.

    "Negotiating around a family feud that threatens to sink a serious business deal is not his idea of how to play. It would be no surprise if Nhleko calls their bluff and pushes his chair away from the table."
    MTN may walk out of RCOM deal if Ambani feud continues: Report- Telecom-News By Industry-News-The Economic Times

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    RIL again writes to RCom, MTN
    The fight between the Ambani siblings flared up, with Mukesh Ambani-led RIL on Thursday shooting off another letter to RCom and MTN, who are negotiating a USD 70 billion merger deal, invoking non-compete agreement.

    "RIL has invoked the provisions of dispute resolution contained in the non-competition agreement dated January 12, 2006, and has invited RCom to participate in the process of mutual conciliation prior to commencement of formal arbitration," an RIL spokesperson said.

    Reacting to the latest RIL missive, an RCom spokesperson said: "The second letter from RIL is a sign of desperation and frustration." The latest RIL communication, a follow up of the letter asserting its Right of First Refusal on majority stake in RCom, could put up another obstacle in the ongoing negotiations between the South African and Indian firms.

    An MTN spokesperson from Johannesburg, however, declined to comment on the communication, as also on reports that it is extending the exclusivity agreement for negotiation with RCom.
    Business Today - Beta - India's leading business magazine.

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