Dueling brothers sink telco deal

Reliance merger falls through

NEW DELHI — A family feud has killed off the telco mega-merger that India’s Reliance ADA Group was pursuing at the same time as its negotiations with the DreamWorks principals concerning a buyout of the studio.

Company said Friday that exclusive talks with MTN, the South Africa-based mobile phone group that it had planned to acquire and merge with its own Reliance Communications, had lapsed.

In a note to the Johannesburg stock exchange, MTN said “certain legal and regulatory issues” caused the talks to collapse.

Deal, which at one stage could have cost $38 billion, required the issuance of new shares in Reliance Communications, which Mukesh Ambani, the estranged brother of Reliance ADA chief Anil Ambani, opposed. Through his Reliance Industries, Mukesh Ambani initiated court actions against the deal and sought arbitration, a process that would also have overrun the exclusive negotiation period between Reliance ADA and MTN.

Reliance ADA has recently kept quiet on the status of the DreamWorks talks but has indicated that Spielberg and company are seeking $1.5 billion in capital to produce a slate of 20 movies. Initial indications in June were that Reliance might supply $500 million-$600 million as equity. More recent commentary has pointed to Reliance injecting $750 million in equity.

It is not clear whether the collapse of the MTN deal has any impact on the DreamWorks deal talks. Anil Ambani has reportedly said Reliance ADA will pursue other telco acquisitions.

MTN has phone operations in 22 territories in the Middle East and Africa and was regarded as complementary to Reliance ADA’s burgeoning digital distribution businesses, which include phones and broadband Internet.

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