AT&T joins race for Reliance: WSJ

Nicole McCormick
07 Jun 2010

US cellco AT&T has joined Etisalat and MTN in the race to buy into India’s second-ranked mobile operator Reliance Communications (RCom).

AT&T has held informal talks with RCom over the past few weeks about taking a significant minority stake in the Indian operator, reports the Wall Street Journal Online.

With the US mobile market approaching saturation, AT&T has been looking at international expansion opportunities for the past year, including with RCom.

On Sunday, RCom said its board had approved the sale of up to a 26% stake in the firm to help reduce its $6.2 billion debt and fund its 3G rollout.

The board agreed to sell the shares at an “appropriate premium to the prevailing market price” and “examine and pursue other appropriate strategic combination or consolidation opportunities.

High valuations on Indian mobile assets has so far kept AT&T away as a serious acquirer, but RCom is looking particularly attractive given its shares have fallen 50% in a year.

While AT&T ideally would like a controlling stake in RCom, it may have to be content with a 26% interest for now, given the Indian operator is the only firm standing without a foreign backer.

AT&T pulled out of the Indian mobile market five years ago, when it sold its 33% stake in Idea Cellular to existing joint venture partners the Tatas and Birlas for 13 billion rupees ($278.6m).

But the US firm has been eager to re-enter the market under chief executive Randall Stephenson who was appointed in 2007, said WSJ.

Abu Dhabi-based Etisalat is also reported to be in talks about buy a 25% stake in RCom for for 180 billion rupees ($3.9b).

South African operator has also held talks with Rcom over a possible merger.

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