Anil's RCom needs cash, to sell 26 per cent stake | india | Hindustan Times
Today in New Delhi, India
Jul 21, 2017-Friday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Anil's RCom needs cash, to sell 26 per cent stake

The Anil Ambani-controlled Reliance Communications is all set to sell 26 per cent of its stake to a foreign partner to meet a need for funds to roll out 3G telephony services. HT reports.

india Updated: Jun 07, 2010 01:10 IST
HT Correspondent

The Anil Ambani-controlled Reliance Communications (RCom) is all set to sell 26 per cent of its stake to a foreign partner to meet a need for funds to roll out 3G (third generation) telephony services.

While the debt-heavy company said on Sunday its board had approved a plan to sell the significant minority stake, industry sources told HT a restructuring of Ambani's telecom tower business and a separation of its domestic business from international operations were also being considered to generate still more cash.

The moves also come in the backdrop of a thaw in Anil's relationship with elder brother Mukesh Ambani. Last month, they ended an agreement not to compete in businesses. This came with the withdrawal of a 'right of first refusal' clause by Mukesh, allowing RCom to get in investment from outside.

"The board of directors of Reliance Communications Limited has approved in-principle the induction of strategic/private equity investors into the company for an up to 26 per cent equity stake at an appropriate premium to the prevailing market price, and also to examine and pursue other appropriate strategic combination/consolidation opportunities," RCom said in a statement.

Though it didn't disclose the strategic investors, sources said RCom is negotiating with Etisalat Emirates Telecommunications Corp (Etisalat).

RCom has also been involved in speculation considering a strategic partnership with South Africa's MTN, which could not consummate a deal with Rcom's rival Bharti Airtel after an earlier merger proposal with RCom had failed two years ago.

Last week, Mohammad Omran, chairman of Etisalat, said that Etisalat was looking at several companies to buy a stake in an Indian operator.

RCom chairman Anil Ambani's proposed visit to South Africa has also given rise to speculation that the firm may merge with MTN.

Except for RCom, all incumbent private telecom operators - Bharti Airtel, Vodafone Essar, Tata Teleservices, Aircel and Idea - have foreign telecom service providers as stakeholders. RCom is set to join the league.

"If the company needs to survive in the highly competitive telecom market, it has to expand and it requires funding," said a former top executive of the Reliance group.

"Equity sale is the best operation it has."

RCom had net debt totalling Rs 19,900 crore at the end of March 2010. It will require between Rs 25,000 crore and Rs 30,000 crore additionally in the financial year.