Reliance eyes tie-up with MTN

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telecommunication merger between Reliance and MTN

Reliance Communications in May announced that it has entered into talks with the South African telecommunications giant MTN Group about a possible tie-up. If the joint venture or merger goes ahead it will create a company with more than 115 million customers.

With MTN’s market capitalization standing at around US$38.2 billion, some observers have noted potential difficulties for the two companies in raising funds for the deal. The tie-up could be complicated by economic sanctions on some of the countries in which MTN does business, particularly Iran. US companies and individuals are barred from doing business or investing in Iran and as a result, any deal may have to be financed without the involvement of US banks.

In early May, Bharti Airtel, which had also shown an interest in MTN, claimed that various banks in Europe and the US had provided it with “confident letters of funding” worth US$60 billion. But after Bharti Airtel withdrew from the deal, executives briefed on the financing discussions said no money had been committed.

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