MTN Group Ltd., Africa's largest mobile-phone company, may drop in Johannesburg trading today after it and Reliance Communications Ltd., India's second-largest mobile-phone company, ended merger talks.

``Investors are going to take this badly,'' Khulekani Dlamini, a fund manager at Renaissance Asset Management in Cape Town, which oversees the equivalent of about $224 million, including MTN shares, said yesterday.

A dispute between the brothers who control Reliance Communications and Reliance Industries Ltd., Anil Ambani and Mukesh Ambani, derailed the deal, which would have been South Africa's biggest. MTN issued a statement saying the talks had been terminated after the close in Johannesburg on July 18.

This is the second time in two months that Johannesburg- based MTN has failed to strike a deal with an Indian wireless operator. Bharti Airtel Ltd., India's biggest carrier, said May 24 that it ended talks with MTN after failing to overcome differences over ownership and management.

MTN dropped 2.8 percent to 130.30 rand on July 18. The shares have gained 1.8 percent this year, valuing the company at 243 billion rand ($32 billion).

``The reaction to this will be very similar to after the Bharti withdrawal,'' Dlamini said. MTN slumped 5.7 percent to 148.07 rand on May 26, the first trading day after Bharti walked away.

The collapse of MTN's discussions with Reliance Communications ended a plan to create a mobile-phone operator that would have had more than 116 million subscribers from the Cape of Good Hope to the Himalayas.

New Suitors?

MTN may now attract suitors from companies in developed countries that are looking for ``opportunities in high growth developing countries at a reasonable price,'' Dlamini said. ``MTN is now fairly cheap and its long-term prospects are still good.''

MTN trades at 15.39 times estimated earnings. That compares with China Mobile Ltd's 15.90 times and Bharti's 18.5 times.

MTN will look at other ``value-enhancing opportunities,'' spokeswoman Nozipho January-Bardill said in a telephone interview in Johannesburg yesterday. ``There is nothing specific at the moment, but MTN has always been pursued because of its success and that will probably continue.''

Source:Bloomberg