Agencies
With inputs from PTI and Reuters

New Delhi, Jul 18: Anil Ambani’s Reliance Communications (RCom) and South African telecom giant MTN on Friday announced they were calling off talks aimed at creating a $66 billion telecom group.

"The two sides were unable to conclude the transaction due to certain regulatory issues," said a RCom spokesperson in a statement.

MTN and Reliance Communications started exclusive talks on May 26 and the deadline was extended to July 21.

The extension, announced on July 10, came after a claim on shares in RCom by Mukesh Ambani, estranged brother of RCom chief 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 telecom group with operations in about two dozen countries and around 120 million subscribers. When the talks began, MTN had a market capitalisation of $38 billion and Reliance Communications was worth $28 billion, but a sharp slide in markets has eroded valuations.

Mukesh’s Reliance Industries Ltd (RIL) last month wrote to MTN saying that it has right of first refusal over a sale of controlling stake in RCom. Effectively, what Mukesh’s group has said was that any sale of a controlling stake in Reliance Communications to anyone but Reliance Industries was illegal.

MTN in a statement to Johannesburg Stock Exchange said, "With regard to exclusive negotiations relating to a potential business combination between MTN and RCom, owing to certain regulatory issues, the parties are unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse."

RIL was not immediately available for comments.