RCom tower biz on block for $5 bn
Anil Ambani-led Reliance Communications (RCom) has hired UBS to sell its 95% stake in tower unit Reliance Infratel and has reached out to several strategic and private-equity firms, asking for $5 billion for the stake, three sources with direct knowledge said.business Updated: Aug 20, 2011 01:45 IST
Anil Ambani-led Reliance Communications (RCom) has hired UBS to sell its 95% stake in tower unit Reliance Infratel and has reached out to several strategic and private-equity firms, asking for $5 billion for the stake, three sources with direct knowledge said.
Potential bidders have expressed concern about debt-laden Reliance's valuation being at least a billion dollars too high, two of the sources said, adding that the process was still at a very early stage.
UBS has reached out to US companies American Tower and Crown Castle International, India's Viom Networks and UAE's Etisalat, said the sources, who declined to be identified because the process is not public yet.The bank has also reached out to private-equity firms Carlyle, Apax Partners and Blackstone , the sources said.
RCom who ranked 36 on the Forbes global rich list last year, said in May it had several offers for its tower arm. But the sources said there were no formal offers on the table yet, mainly because of huge gaps in valuation.
Reliance Communications is battling a fast-growing but ferociously competitive Indian cellular market as low call prices and high operational costs squeeze margins.
Tower valuations, based on analyst expectations and past deals, average about $1,00,000 per tower. For Reliance's 50,000 towers, that would come to a valuation of $5 billion.
But sources said potential bidders value RCom assets at a far lower price mainly because the company needs to sell its stake to help recover some of its $7.5 billion debt.
The clock is ticking and costs are seen rising as RCom struggles to cut debt ahead of a major bond redemption next year.
First Published: Aug 19, 2011 21:22 IST