Frontrunner Etisalat wise to pursue RCom

Nicole McCormick
08 Jun 2010
UAE-based Etisalat looks like it’s emerged as the frontrunner for a stake in India’s Reliance Communications, but is investing in the hyper-competitive market really worth it?
Etisalat certainly thinks so - and it’s probably right.
The firm’s chairman Mohammad Omran confirmed to Reuters yesterday that Etisalat is “studying several opportunities in India, among them is Reliance.”
AT&T has denied reports that it is in talks to buy a minority stake in RCom.
Similarly, South African telco MTN says it is “definitely not” in any merger talks with Reliance, reported Bloomberg.
One thing that is clear is that Reliance, backed by billionaire Anil Ambani, is seeking a strategic partner to help reduce its $6.2 billion debt burden and help pay for network expansions.
The board approved the sale of up to a 26% stake in the firm on Sunday.
As the second largest operator with 105 million subscribers, the company certainly has scale, deep pockets and is in for the long-haul.
Indian mobile operators are adding 15-17 million new customers a month, and with 600 million subscribers, there’s still another 600 million or so customers left to sign up.
Etisalat wants a bigger piece of the pie. It has already stumped up $900 million for 45% in GSM1800 start-up Etisalat DB Telecom, which is still on the drawing board but has start-up spectrum in 15 circles.
Reliance has mostly 4.4MHz of start-up 1800MHz spectrum in 15 circles. It also has 6.2MHz of spectrum in six circles, while in Bihar it has 8MHz of 900MHz spectrum.
Last month, RCom also picked up 5MHz of 2100MHz spectrum in each of 13 circles for $1.8 billion.
India’s dismal 1% broadband penetration adds to the country’s 3G opportunity.


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