Etisalat seeks 45% of Reliance: report

Nicole McCormick
03 Jun 2010
Daily News

UAE-based telco Etisalat is in advanced talks to buy a 45% stake in India’s second-ranked mobile firm Reliance Communications (RCom).

The Times of India broke the news, reporting that Etisalat is in talks to buy 25% of RCom for $3.8 billion to begin with.

Citing a banking source, the paper said Etisalat planned to then make an open offer for an additional 20% stake from the public.

After both deals, Anil Ambani's stake in RCom would fall from 67.6% to about 55%.

In a statement to the Bombay Stock Exchange, RCom said it has “been receiving various proposals from time to time from reputed international telecom companies expressing interest in acquiring a strategic equity stake.”

Etisalat chairman Mohammad Omran told Reuters that the company is “talking to several Indian operators and are evaluating several Indian operators but have not reached a final decision."

He added that a deal could take “a few weeks or it may take a few months” to seal.

"Not only Reliance Communications but some other players will also be looking at selling [stakes] to raise funds to cut debt,” K.K. Mital, head of portfolio management services at Globe Capital, told Reuters.

RCom paid $1.83 billion to the government on Monday for 3G spectrum it won in 13 regions in last month’s hyped up 3G auctions.

It is the only big Indian mobile operator without a foreign investor.

“If some foreign player is still looking at India as an attractive market, RCom being a pan-India player with presence in both GSM and CDMA could be a good entry point,” Abhishek Anand, an analyst with Centrum Broking, told the WSJ.

For its part, Etisalat paid $900 million in 2008 for a 45% stake in Indian GSM1800 start-up Etisalat DB Telecom, which has not yet launched but has licenses to offer services in 15 circles.

According to existing M&A regulations, a single entity cannot hold more than 10% stake in two companies, so Etisalat DB could be merged with RCom.

Reliance’s Mumbai-listed shares rose 11.52% to close at 154.85 rupees yesterday.

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