New Delhi, July 3: With just five days left for Anil Ambani's Reliance Communications Ltd (RCOM) to strike a deal with South Africa's MTN, Mukesh Ambani-promoted Reliance Industries Ltd (RIL) today called RCOM for mutual conciliatory talks before initiating formal arbitration.

RIL had earlier written to RCOM, MTN and banks that it had the first right of refusal over sale of RCOM shares according to a non-compete agreement of January 12, 2006. The ADA Group, however, has consistently refused to recognise the agreement.

To fence off its proposed deal from the threat posed by RIL's claims, two Anil Ambani Group companies have already filed caveats in the Bombay High Court. This is to ensure that no ex-parte order is issued in case RIL decides to enforce the first right of refusal.

In a statement issued today, RIL invoked the provisions of dispute resolution contained in the non-compete agreement of January 12, 2006. “RIL has invited RCOM to participate in the process of mutual conciliation prior to commencement of formal arbitration,” the statement said.

Anil Ambani-owned RCOM immediately retorted, saying the move only showed RIL group's frustration. “This is only a sign of RIL's increasing desperation,” said an RCOM spokesperson. He, however, did not confirm whether such a letter was received or not.

Before the Ambani brothers formally split in 2006, RCOM was under the control of Mukesh Ambani. RCOM and Reliance Energy were given to Anil Ambani as part of the settlement between the brothers. But, the two have clashed on one issue or the other, including on gas supply from RIL’s KG basin to Anil Ambani's Dadri plant, setting up of captive power plants by RIL-promoted special economic zones, etc.

Even as the war of words between the Ambani brothers continues, the huge meltdown in the Indian stock markets has seen the market capitalisation of RCOM drop by almost a third to $18 billion since it initiated talks with MTN.

The 45-day exclusive talks period between RCOM and MTN expires July 8. The two are negotiating for an extension of the exclusivity agreement by two-three weeks. Investors in both the companies are apprehensive given the fact that MTN shares have plunged to a three-month low and that of RCOM to a 52-week low.

The size of the deal between RCOM and MTN is expected to be somewhere between $45 billion and $50 billion.

AMBANI VS AMBANI

MAY 26: RCOM signs 45-day exclusivity deal with MTN on merger talks

JUNE 19: RIL sends letter to MTN on first right of refusal

JULY 3: RIL initiates arbitration proceedings against RCOM

WHAT RCOM SAYS...

This is only a sign of RIL's increasing desperation and frustration. RIL's claim of a first right of refusal is simply an excuse to try and disrupt the creation of one of the world's most valuable telecoms combinations