A deal between Anil Ambani’s Reliance Communication Ltd, the second largest private cellular operator in India and South Africa’s telecom giant MTN is finally off due to serious differences cropping up on the valuation front.

In separate statements, RCOM and MTN said exclusive talks for a deal that would have created a $66-billion emerging markets telecom giant with operations in about 24 countries and around 120 million subscribers were being snapped.

“Owing to certain legal and regulatory issues, the parties are presently unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse,” RCOM announced on Friday.

MTN also issued a similar statement to Johannesburg Stock Exchange. The RCOM-MTN announcement means MTN is free to pursue other suitors. Earlier, MTN had held talks with Sunil Mittal’s Bharti Airtel for a deal, but Mittal backed out of talks later.

Sources involved in negotiations told The Indian Express that MTN’s nervousness about a legal dispute between RCOM and Mukesh Ambani-promoted Reliance Industries Ltd was not the sole reason for the deal falling part. RIL had yesterday initiated arbitration proceedings against RCOM staking claim to the right of first refusal whenever RCOM decides to sell equity stake.

A source said RCOM had suffered mark-to-market losses of $1.5 billion on currency hedging and these were not factored in while valuing the company based on EBITDA (earnings before interest, tax, depreciation and amortisation). Further, while RCOM wanted the share price to be referenced to May 26 when it entered into exclusive talks, MTN insisted that the price as on date of the deal should be considered for valuation purposes.

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