MTN shareholders should not be too concerned about reports that Reliance Communications chairman, Anil Ambani, wants to be the biggest single shareholder in the South African telecommunications player.
This is according to financial analyst Irnest Kaplan, MD of Kaplan Equity Analysts. He was responding to a report yesterday by the British Financial Times (FT) that Ambani wants to up his shareholding in SA's second biggest cellular operator to 34.9%.
This would reportedly entail a cash purchase of $4 billion to $5 billion, in addition to the as-yet undisclosed Reliance share swap for a stake in MTN.
According to Kaplan, suggestions by the FT report that Ambani would be the controlling shareholder of MTN are incorrect, as Ambani would not have a 51% stake, even though he would be the biggest individual shareholder.
"Shareholders have always known Reliance would be acquiring a big chunk of MTN, so it's not a major issue," says Kaplan. "What's more important is what the terms of the deal will be, which is something we are still waiting for."
Kaplan says shareholders may even be encouraged by Ambani having significant sway in the company, as he has a wealth of telecommunications experience to draw from and would want maximum returns on his investment.
"He won't be rocking the boat," predicts Kaplan.
MTN has been in talks with Reliance since the end of March, when the Indian player secured a 45-day period for exclusive talks.
Before that, the South African company was talking to Bharti, another Indian operator. This process was terminated after a suitable transaction structure could not be agreed upon.
At the time, Bharti said the talks ended when its proposal to gain a controlling stake in MTN was turned on its head when MTN started gunning for Bharti instead.
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