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Etisalat confirms RCom talks

Abu Dhabi’s Etisalat is looking at a deal with Anil Ambani-led Reliance Communications as it mulls its options in India, Chairman Mohammad Omran said.

business Updated: Jun 07, 2010 22:14 IST

Abu Dhabi’s Etisalat is looking at a deal with Anil Ambani-led Reliance Communications as it mulls its options in India, Chairman Mohammad Omran said.

Valued at about $7.7 billion, RCom said on Sunday it was open to selling a stake of up to 26 per cent to strategic or private equity investors.

“We did not make any offers to Reliance. We’re studying several opportunities in India, among them is Reliance,” Omran said in Amman on Monday. “India is a large market and we are closest to India. But we’re studying several acquisitions,” he said, citing new licences that will become available in Syria and Iraq.

“We don’t have a liquidity problem.”

A Reliance Comm official could not immediately be reached for comment on Monday.

“The event would indeed be positive for RCom, if it happens, however, we would view it as negative for the sector,” Kotak Securities analysts wrote in a note on Monday.

“This event would mean a further infusion of risk capital in the industry, without leading to any consolidation,” they said.

RCom had net debt of Rs 19,900 crore at the end of March and last month paid Rs 8,585 crore for a 3G licences in an auction that was far more costly than had been forecast. A stake sale would help it cut debt.

“Some of these major players who are not present in India, if they want to give a sense to their shareholders that we are not missing the India cake, we are not missing the India theme as a strategy, so probably they may find it useful,” said Jagannadham Thunuguntla, equity head at SMC Capitals.