 "Harsh Goenka's tweet on MTN sparks speculation of major telecom deal in India")
A tweet by Harsh Goenka, Chairman of RPG Group added fire to the speculation that Africa’s largest mobile operator MTN is once again eyeing an entry into the Indian telecom sector through a buyout of a Mumbai-based operator.
On Monday evening Goenka tweeted “MTN doing due diligence of a large Mumbai-based telecom company. Will this mega deal happen?”
The South African telecom major had in 2008 tried to merge unsuccessfully with Anil Ambani’s Reliance Communications while in 2009 it was holding similar talks with Bharti Airtel. The deal with the former fell through in 2008 due to the family feud between the Ambani brothers, while the deal with thelatter fell through becauseMTN had insisted that after the merger, Bharti Airtel should be a subsidiary of MTN. A year after the collapse of the MTN deal, Bharti bought Kuwait-based Zain’s African operations for $9 billion. Bharti CEO Sunil Mittal at the time had called the deal “a second chance, a better chance”.
The merger talks with Reliance Communication were reportedly once again revived in 2013but were put on hold till India revised its telecommunications mergers and acquisitions norms.
Currently Reliance Communication is the fourth-largest operator in India after Vodafone, Bharti Airteland Idea Cellular. The Mumbai-based firm is also on a cost optimisation drive through outsourcing of network management services and call centre operations and in May 2014 it raisedabout Rs 4,808 crore by selling shares to institutional investors to help reduce its debt burden.
According to a report in The Economic Times , the grapevine suggests that Goenka’s reference is mostly to Anil Ambani’s RCOMsince policy rules around spectrum auction and M&A are clearer now. However, Tata Teleservices cannot be ruled out as a contender afterJapan’s NTT DoCoMo decided to exit the company earlier this year.