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The War of Czars: What does Mittal has to gain from Ambani feud?

July 19, 2008

In May, I wrote a post about Mittals interest in acquiring the African telecom behemoth, MTN. [see: Season of Mergers] Discussing the financial and strategic nitty gritties of this deal had never been easy. In the past, MTN has proved to be quite a charming temptress, luring many a suitor to its den only to send them back home, with a hangover and throbbing head. Vodafone was one of them, FYI.

But a lot of water has flown under the bridge since May.
Airtel Out.
RCOM In.
RIL pitches in.
RCOM vs RIL…

Phew!!! What a battle of sorts!

But the tables are turning and the underdog seems is being offered a second chance.
It was widely seen in the industry as the ‘better offer’ of RCom which destroyed the chances of Airtel-MTN merger. But today, MTN is sitting in the sidelines to play an equal partner in the forging of a telecom entity spanning over 23 countries and a subscriber base of around 2billion [RCom has a subscriber base of around 41million, Airtel of 50million].
RCom was only about to close the deal, when Mukesh Ambani’s RIL pitched in with his two pence, and said “Hey guys Wait! I hate to be a party pooper but I have the right of first refusal!”

And thus started a corporate battle, which has spilled from the corporate boardrooms, taken ugly proportions, built into a feud and the matter has spilled right to the PM and Her Royal Highness.
And irony of all ironies, July 21 is going to be the time when the exclusivity deal forged by MTN-RCom will lapse.

So?

    1. With the confidence motion slated to be in July 22, it is an informed guess that government can’t handle two high voltage dramas back to back. One has to be shifted. Looks like the peace deal between the two Ambani bros. can’t be before July 21. Oops! Period of non-exclusivity ends
    2. Kautilya 1-0h-1: Engage the enemy when he is the weakest.Airtel surely seems to have read its KautilyaShastra. Its just a matter of time, before Airtel finds itself back in the fray with RCom’s resources are busy fighting off the situation
    3. Lets accept it, just because they [Ambani bros.] are fighting over MTN, doesn’t mean the vitriolic situation is a fallout of the MTN Scene. No, it was pending for a long, long time. Each of them sees the other taking out some great project out of its hand in one way or the other. So, ADAG group will pull punches and mind you, heavy punches for putting an end to this matter. But again, RIL is big, big enough to swerve, duck and punch all in the same breath.
      My verdict?
      Tough fight. Long fight.

      Over and Out.

Continued: The War of the Czars: How the Czars fight

[The author, Soham Das takes a passionate interest in business innovation,electronics and environment. An avid blogger and technology guy, he spends most of his time studying charts or bringing up projects for his employer. When he is not blogging on markets, technology and their business issues, he spends his time conceiving and executing projects for a hi-tech electronics startup based out of South India. Mail him at sohamdas at gmail dot com. He is listening]

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