The UAE’s Etisalat is on the verge of buying 26% of Indian telecoms company, Reliance Communications, according to the Financial Times.
The deal is estimated to be in the region of US$3bn.
Reliance, the second largest operator in India by subscriptions,…
The UAE’s Etisalat is on the verge of buying 26% of Indian telecoms company, Reliance Communications, according to the Financial Times.
The deal is estimated to be in the region of US$3bn.
Reliance, the second largest operator in India by subscriptions, has been flirting with a number of suitors in the past two months. The company has a pressing need to recoup funds to pay off its recent 3G spectrum purchase, reduce debt and generate funds for further expansion.
Reliance chairman Anil Ambani currently owns 67.58% of the company but is reportedly prepared to dilute that holding. Ambani recently agreed a truce with his brother Mukesh, which led to the removal of a right of first refusal for Mukesh in the event of Anil deciding to sell a stake in Reliance, which was inherited from their father. This opened the door for a stake sale.
Possible suitors for the 26% stake have included Saudi Telecom, South Africa’s MTN and French operator Vivendi.
There could be some regulatory hurdles for Etisalat and Reliance to negotiate, as Indian law forbids any one operator from owning more than 10% in any two domestic telecoms operators. Etisalat already owns 45% of Etisalat/DB, an Indian telecoms operator locally known as Swan Telecom.
This may force the two groups to consider merging Reliance with Swan Telecom.
An alliance between the two groups could be completed as soon as mid-August, the FT claimed, citing a person close to the matter. Another person told the paper it could take up to the end of the year. Reliance Comm and Etisalat declined to comment on any specific negotiations.
Last month, Reliance Comm merged its towers business with that of GTL in a deal that could cut its debt by US$3.9 billion.
Etisalat reported a 21% fall in second quarter profits on Sunday, and stated that it would be actively pursing overseas opportunities from this point onwards.
