South African mobile phone operator MTN Group and India's Reliance Communications have extended exclusive talks on a potential combination to create a top-10 global telecom group.
The two-week extension, announced on Wednesday, comes after a claim by Mukesh Ambani, estranged brother of Reliance Communications Chairman Anil Ambani, on shares in the Indian company and a sharp drop in share prices created hurdles to a deal by the original deadline of July 8. The new deadline is July 21.
MTN and Reliance said on Wednesday there was no certainty the discussions will result in a deal. Dobek Pater, telecoms analyst at Africa Analysis, said the market had expected the talks to be extended. "I think they will like to pursue the deal because they do think that is a viable opportunity. And given more time the brothers (Mukesh and Anil Ambani) will be able to resolve misunderstanding within Reliance," Pater said.
MTN and Reliance Communications started talks on May 26 as part of an effort that could create an emerging markets telecoms group with operations in about two dozen countries and around 120 million subscribers. The talks began after Reliance Communications' larger rival Bharti Airtel failed to reach a deal with MTN. At the time, MTN had a market capitalisation of $38 billion and Reliance Communications was worth $28 billion, but a sharp slide in markets has since eroded valuations.