SKT eyes stake in Indian cellco

Nicole McCormick
11/06/2010
News
Daily News

South Korea’s SK Telecom and Mukesh Ambani’s Reliance Industries have emerged as potential investors into Indian mobile start-up Videocon Telecom.

SKT is negotiating to buy a 26% stake in the firm, whose parent firm Videocon Industries is one of India’s largest consumer electronics and home appliances retailers, said the Economic Times .

A deal for SKT would advance its Asian shopping spree – the firm paid $100 million for a 25% stake in Malaysian Wimax operator Packet One last month.

But the Dhoot family-controlled firm is reportedly asking 36 billion rupees ($770.1m) for the stake, a figure analysts believe is too high for the mobile outfit which launched its service in three circles in late March.

Reliance Industries has also been linked to a buyout of Videocon Telecommunications.

The Reliance Industries board has reportedly approved plans for the energy-based conglomerate to re-enter the telecoms scene, following the end of a non-compete agreement between Mukesh Ambani and his estranged brother, Anil Ambani who heads Reliance Communications (RCom).

Himachal Futuristic's Infotel Broadband Services, which is bidding for spectrum at 2.3GHz, is also a potential target for Reliance Industries, The Business Standard said.

Videocon Group chairman Venugopal Dhoot told ET that the firm is evaluating proposals from global communications companies.

Previous talks with UAE’s Etisalat – which is now in the lead for a stake in RCom – and Turkish operator Turkcell were abandoned due disagreements over price in late-2008.

The Dhoot family’s high asking price may again scupper a new deal.

Three analyst firms estimate Videocon Telecom to be worth about $2 billion, but the 36 billion rupees asking price values the company at $2.8 billion, says ET.

Videocon is aiming for 100 million mobile subscribers across all 22 circles three years after launch.

Related content