Emirates Telecomunications (Etisalat) is close to buying a 26 per cent stake in Reliance Communications (R Comm), according to a report in the Financial Times.
The two groups are also considering merging R Comm with Etisalat DB (formerly Swan Telecom), another GSM licence holder in India for 13 circles.
Etisalat holds a 45 per cent stake in the company. Etisalat invested $900m in Etisalat D B. However, the company could not do much in the country.
The deal is estimated to be worth about $3bn (Rs 14,100 crore), according to the reports, which cites sources familiar with the subject. This could not be independently confirmed.
The existing merger and acquisition laws do not permit a new licence holder to merge with another entity before three years. This lock in period will expire in January, 2011.
The rules also do not permit one company to have more than 10 per cent equity holding in more than one operator in a region. Hence, either Etislaat will have to divest its equity in RComm or it will have to merge with Etisalat DB.
In both the cases, the company will have to wait until 2011.
{{/usCountry}}In both the cases, the company will have to wait until 2011.
{{/usCountry}}Reliance Comm and Etisalat declined to comment on any specific negotiations, Financial Times report said.
So far, Abu Dhabi-based Etisalat is the only company that has acknowledged that it is considering a deal with R Comm, the only major cellular carrier without a foreign strategic investor in the world's fastest-growing mobile market.