Africa-based MTN Group and India’s Reliance Communications have halted their negotiation talks regarding a potential link-up, according to Bloomberg.
HumanIPO reported in May on the possible partnership between MTN and Reliance Communications as part of MTN’s re-evaluations of its South African assets.
Bloomberg reported three sources as saying MTN is skeptical regarding the industrial logic deal during India’s revision of its telecommunications acquisition regulations and mergers. The sources reportedly requested not to be named due to the privacy level of the talks.
The talks, which were initiated earlier this year, might have seen MTN acquiring approximately 24 per cent in Reliance Communications. One of the sources revealed the stake is valued at US$1.2 billion.
According to the report, MTN and Reliance Communications were also unable to reach an agreement regarding the price of a potential transaction.
MTN has reportedly been eyeing India for deals due to the decline in growth of wireless use in Africa. Apparently Reliance was twice in talks to be bought by Bharti Airtel, but negotiations unravelled four years ago during due to political opposition in South Africa.
According to data compiled by Bloomberg, in the past four years MTN’s dividend yield has quadrupled. This translates to an approximate 4.6 per cent, which is reportedly lower than Vodacom’s 7.3 per cent.
MTN chose Phuthuma Nhleko, CEO of the telecommunications company as chairperson last month. During his approximate nine year tenure, he managed to establish MTN outside of South Africa’s borders.
Since 2009 MTN’s shares have increased by two-thirds following its acquisition in market share in the 20 countries it operates in.
