Shares of Reliance Communications rose Monday in the first market reaction in Mumbai to the collapse of the Indian mobile operator’s plan to tie up with its South African rival MTN.

The rise in the share price of India’s second largest wireless carrier by 2.6 per cent to Rs446.50 per share is probably the only good news billionaire businessman Anil Ambani, its controlling shareholder, has had in a while.

His dream of merging his company with MTN to create one of the world’s largest emerging market mobile groups was scuppered by an 11th-hour objection from Mukesh Ambani, his older brother, who claims a right of first refusal over any deal involving the sale or swap of Anil’s stake in Reliance Communications.

The savage feud between the pair has left a bitter taste in the mouth of corporate India.

In particular, it has led to concern over the ability of Reliance Communications, or indeed any of the companies controlled by the two brothers, India’s most powerful businessmen, to do large deals in the future.

“These two should be good role models to a lot of the rest of country in terms of the way they think and in their ability to get stuff done,” a banker who has worked with the siblings said. “It’s a great shame.”

The plan to create an emerging markets group through a link-up with MTN was originally pursued by Reliance Communications’ arch-rival, Bharti Airtel, India’s largest mobile carrier, which wanted to buy the South African operator.

But when the South African government objected to the outright sale of a national champion of MTN’s stature to foreigners, Anil Ambani stepped into the fray with an idea he hoped would allay regulators’ fears.

Instead of Reliance Communications buying MTN, the South African operator would buy its Indian rival. As part of the deal, Mr Ambani would swap his 67 per cent holding for a near controlling stake in MTN.

This would satisfy South African political concerns by ensuring that MTN remained a listed company in Johannesburg with control of an international empire, while putting Mr Ambani at the helm of an enlarged group stretching from Africa through the Middle East to the subcontinent.

However, it was then that Mukesh Ambani’s company, Reliance Industries, claimed the right of first refusal that it said dated from a contract formulated when the two brothers carved up their late father’s group between them in 2006.

Although Reliance Communications disputed the claim, the threat of legal action from a businessman of Mukesh’s wealth, estimated by Fortune at $43bn this year, was enough to scare MTN away.

Analysts say the loss of MTN does not preclude other deals by Reliance Communications.

On paper at least, as long as Anil Ambani does not seek to sell or swap his stake in his mobile operator, Reliance Industries will have no grounds to exercise the alleged right of first refusal.

Alternative targets to MTN could include Orascom Telecom, a mobile operator in Africa, Asia and the Middle East, which in February raised the possibility it could be sold as part of further consolidation of the telecoms industry.

Nasdaq-listed Millicom, a mobile operator in Africa, Asia and Latin America, saw a tie up with China Mobile, the world’s largest wireless operator, collapse in 2006 after a last-minute change of heart by the state-controlled company.

Other targets could include Russian mobile operators such as Sistema’s MTS, controlled by oligarch Vladimir Yevtushenkov. But few analysts believe Reliance Communications will launch another big foray any time soon, particularly with so much uncertainty hanging over the company from the dispute between the brothers.

The row could yet end in legal action. Anil Ambani’s investment company, AAA Com, which holds his stake in Reliance Communications, has held out the prospect of trying to seek “damages” from Reliance Industries.

Raamdeo Agrawal, joint managing director of brokerage Motilal Oswal, said that while he expected the brothers to resolve their differences in the longer term, it would take time for the dust to clear.

“These kind of opportunities do not come along every day,” he said of the MTN- Reliance Communications proposed tie-up.

As for investors, they have largely greeted the collapse of the talks with relief.

After all, Reliance Communications has plenty to do in its home market, with $6bn of capital expenditure planned for the coming year.

“Now they can focus back on business, which they have a lot of to do over the next year,” one telecoms analyst with a foreign brokerage in Mumbai said.