MTN talks extended

By Christelle du Toit, ITWeb senior journalist

Johannesburg, 09 Jul 2008

SA`s second biggest cellphone operator, MTN, has renewed its cautionary announcement relating to a potential merger with Indian-based Reliance Communications.

The market had expected this announcement yesterday, after the six-week period following the last cautionary notice lapsed this week.

Under the new cautionary, MTN warns: "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."

According to the cautionary, the period of exclusivity will last another two weeks.

MTN and Reliance`s original 45-day exclusive talk period was meant to form the foundation for a telecommunication mega-deal worth as much as $66 billion, according to market speculation.

Under the share-swap and share-buying deal, MTN was believed to be eyeing a majority stake in Reliance, while the Indian telco was hoping to become the single biggest shareholder in the South African operator.

Combined, the company would be a global top-10 telecoms player, capable of tapping into the lucrative emerging market arena.

While the international press has speculated that Reliance wants to take over MTN, the local company`s talks with another Indian player Bharti earlier this year fell through allegedly because MTN was not willing to give away control of the company.