MTN, Reliance call off tie-up talks

By Gugulakhe Lourie and Rina Chandran

JOHANNESBURG/MUMBAI (Reuters) - South African mobile phone group MTN and India's Reliance Communications (RLCM.BO: Quote, Profile, Research) called off talks aimed at creating a top-10 global telecoms group, saying they could not reach a deal.

MTN (MTNJ.J: Quote, Profile, Research), sub-Saharan Africa's biggest mobile phone group, and Reliance Communications, controlled by billionaire Anil Ambani, started exclusive talks on May 26 and the deadline had been extended to July 21.

"Owing to certain legal and regulatory issues, the parties are unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse," MTN said in a statement.

The extension, announced on July 10, came after a claim on shares in the Indian company by Mukesh Ambani, estranged brother of Reliance Communications chairman Anil Ambani, and a sharp drop in share prices created obstacles to completing a deal by the original deadline of July 8.

A deal would have created a $66 billion emerging markets telecoms giant with operations in about two dozen countries and around 120 million subscribers.

"I am sure they (MTN) will probably still be looking for diversification. There are other operators in India that they can look at, but they are much smaller in size relative to Bharti Airtel and Reliance Communications," said Rajay Ambekar, telecoms analyst at Cadiz African Harvest in Cape Town.

Ambekar said MTN would continue to keep an eye on the Indian market, adding that they would likely also look at opportunities in Pakistan, Bangladesh and maybe South America.

"I don't think they will completely walk away from the Indian market," Ambekar added.