Afro-Asian mega mobile operator looks doomed

HIGH HOPES of a deal between India's Reliance Communications and Africa's MTN have been dashed by recent events. It's quite feasible that MTN might pull the plug on the deal entirely.

The first problem is a legal wrangle between the two brothers than inherited the Reliance empire. Eldest brother Mukesh Ambani kept Reliance Industries while younger brother, Anil, got the mobile side which was spun out as Reliance Communications.

Now Mukesh is saying that if Anil wants to sell out of the mobile business, he's got first right of refusal. Naturally, Reliance Communications claims that no such legally binding agreement exists.

The problem is that Mukesh's claim is highly plausible. It's a version of " If you don't make a go of Reliance Communications, then offer it to me before anyone else." Sounds quite likely, doesn't it?

Mukesh is, of course, threatening to drag the whole thing through the Indian courts which normally takes absolutely ages.

If that isn't enough to kill the deal, then Reliance's crashing share price could put the final nail in the coffin. In simple terms Reliance started the whole courtship worth 11 per cent more than MTN and is now worth about 30 per cent less than MTN. Oops.

Considering that Reliance only started negotiating after rival Indian operator, Bharti, dropped out, there's quite a chance that a new suitor could emerge.

After grabbing Ghana Telecom yesterday, and considering its existing stake in South Africa's Vodacom, you can definitely rule Vodafone out. Although Eygpt's Orascom has ruled itself out, the INQ's not so sure about that.

Acombo of the two would make a great deal of sense. Two acknowledged experts in emerging markets. And MTN might decide that maybe it's been a bit too inflexible and offer a better deal than it did to Reliance.

The whole thing is a shame because the market needs another mega operator to counterbalance the likes of Vodafone and China Mobile. Perhaps Mexico's Carlos Slim might decide to do something? µ

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