Etisalat eyes $3.8bn stake in Reliance Comm
Dubai, June 2, 2010
Emirates Telecommunications Corporation (Etisalat) is in advanced talks to buy a quarter of Indian mobile carrier Reliance Communications for Rs180 billion ($3.8 billion), a report said.
If the deal is finalised Etisalat will make an open offer to acquire an additional 20 per cent stake in the No.2 Indian mobile operator from the public, the Times of India said on Wednesday, citing market sources.
The equity capital of Reliance Communications would expand by 25 per cent if a deal is done, and would reduce the stake of its billionaire owner, Anil Ambani, to about 55 percent from 67.58 percent, the paper said.
Shares in Reliance Communications rose as much as 10 percent after the newspaper report.
A Reliance Communications official declined to comment, while Etisalat could not immediately be reached for comment.
A day earlier, another media report linked Reliance Communications to possible tie-up talks with South Africa's MTN.
Reliance Communications is controlled by billionaire Anil Ambani, who recently ended an agreement not to compete in businesses with his long-estranged brother Mukesh, freeing him to bring outside investors into India's No. 2 mobile operator.
That surprise announcement has prompted market speculation about the plans of both brothers now that their conglomerates are free to compete on each other's turf.
Two years ago, Mukesh Ambani thwarted a planned tie-up between Reliance Communications and South Africa's MTN by asserting a right of first refusal on the Indian carrier's shares.
The equity capital of Reliance Communications would expand by 25 percent if a deal is done, and would reduce the stake of Anil Ambani, to about 55 percent from 67.58 percent, the paper said.
India's cellphone market is fiercely competitive, with 15 operators locked in a price war that has destroyed margins and prompted talk of consolidation.
A recent auction of third-generation mobile spectrum was far more costly than expected, with Reliance Communications forking out about $1.8 billion for its licences.
Officials at Reliance Communications and Etisalat could not immediately be reached for comment.-Reuters