subscribe: Daily Newsletter

 

MTN talks drag on, but no deal guaranteed

0 comments

As expected, MTN has extended its talks with Reliance Communications, moving the deadline for exclusivity to 21 July – however, it's warning that there may not be a deal at the end of it.

The company today released a new cautionary statement, saying its has agreed to continue its negotiations with Reliance in relation to a potential business combination until 21 July.
"There is no certainty that these discussions will results in a transaction," the statement adds.
Frost & Sullivan ICT industry analyst Lindsey McDonald says that this announcement is in keeping with the way the entire process has been handled so far.
"MTN has made very little comment on the negotiations and so there has been much speculation in the market and industry about possible outcomes," McDonald says. "The announcement is not a complete surprise, as Frost & Sullivan believes that the potential value of the deal to both parties is too great to try to conclude negotiations quickly."
Currently, the market can only speculate on the reasons for the delay. The complicated nature of the deal is certainly a factor though, as both companies attempt to ensure the best possible outcome. Another cause might be the impact of the so called feud between the Ambani brothers.
"The two week extension of the period of negotiations is perhaps the most interesting aspect of the announcement," Mc Donald notes. "It would indicate that both parties are eager to see a completion of talks in either direction. From MTN's position, there are certainly other operators that could be potential targets or partners and the timing for a deal of this nature makes complete sense."
Frost & Sullivan believes that the current economic environment is compelling companies to strengthen their positions as far as possible. An alliance with another strong emerging market operator would afford MTN some security and greater geographical reach. But it can't afford to wait too long to tie a deal down.