JOHANNESBURG (Reuters) – South African mobile phone operator MTN Group said on Wednesday it had agreed to extend its exclusive talks with India’s Reliance Communications until July 21, 2008.
“There is no certainty that these discussions will result in a transaction. Accordingly, shareholders are advised to continue to exercise caution when dealing in MTN securities,” MTN said in a statement.
MTN and Reliance Communications started talks on May 26 as part of an effort that could create a $66 billion emerging markets telecoms group with operations in about two dozen countries and around 120 million subscribers.
When the talks began, MTN had a market capitalisation of $38 billion and Reliance Communications was worth $28 billion, but a sharp slide in markets has eroded valuations.
Reliance Communications is controlled by Anil Ambani, whose ambition to create a global company was threatened by his estranged brother Mukesh, who says he has first right of refusal on any deal involving Reliance Communications.
Mukesh Ambani runs Reliance Industries.
Analysts had said the possibility of legal action by Mukesh Ambani over the deal and a sharp fall in the Indian telecom’s share price had emerged as obstacles to a tie-up.
