Mukesh Ambani

Mumbai, June 13: Mukesh Ambani is out to wreck brother Anil’s attempts to create a cross-border telecom giant with MTN of South Africa by claiming the right of first refusal to any stake sale in Reliance Communications (R-Com).

Late last month, Anil Ambani started talks with MTN on a possible reverse takeover that would have given him a controlling stake in the $32-billion African behemoth which has operations in 21 countries.

Media reports have speculated that the promoters of R-Com would sell 50 per cent of their 66.12 per cent to MTN and pick up a 34 per cent in MTN. The two sides had opened a 45-day exclusivity arrangement to pore over each other’s books and seal a deal.

On Thursday, Mukesh Ambani-run Reliance Industries wrote a letter to MTN — and sent a copy of the letter to R-Com — claiming that he had the first right of refusal on any stake sale. R-Com received a copy of the letter today.

Citing the provisions of the family settlement that was drawn up in 2005, Mukesh Ambani’s company has held that Anil Ambani cannot sell a majority stake in R-Com to any third party without approaching the elder brother first. RIL is learnt to have indicated that any move to sell 51 per cent in R-Com will amount to a breach of family settlement.

R-Com responded angrily to the claim, terming it “a mala fide effort to disrupt the talks” and hit out at RIL for making “false claims”.

It also maintained that RIL's claim was born out of mounting despair and frustration at the Anil Ambani group's continuing successes.

“RIL is seeking to disrupt the creation of one of the world's most valuable telecom combinations, which will make over a billion Indians proud of our great country,” R-Com said.

Anil Ambani

In a statement issued late this evening, the Anil Ambani group company said the claims made by the senior Ambani's company were “legally and factually untenable, baseless, and misconceived.”

R-Com officials said the talks with MTN would progress smoothly regardless of RIL's claims.

According to a Reuters report, MTN is still in talks with R-Com. “As far as we are concerned nothing has changed. We are continuing talks according to our cautionary announcement published last month,” MTN spokeswoman Nozipho January-Bardill said.

The Anil Ambani camp has argued that RIL's claim is based on a disputed agreement between Reliance Industries and R-Com signed on January 12, 2006 — six days before RIL listed as a demerged entity on the bourses.

R-Com claims this agreement was “unilaterally signed only by RIL’s officials, at a time when R-Com was under RIL’s control, under a procedure which Bombay High Court, in its judgment dated October 15, 2006, held to be unfair and unjust.”

Reacting to the R-Com claim, Reliance Industries said the “validity” of its agreement on Reliance Communications was never questioned.

“RIL in good faith notified both the Anil D Ambani Group and the MTN group of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG,” an RIL spokesperson said in a late night statement.