Stocks of the telecom companies rose on Wednesday on the buzz of consolidation in the sector. Reliance Communications stocks were up by 11 per cent, Idea by 8.97 per cent and Bharti Airtel by 5.16 per cent.
There are rumours that UAE based Etisalat is looking to pick up stake in Reliance Communications. In a statement to the Bombay Stock Exchange, Reliance said that the company has been receiving various proposals from time to time from reputed international telecom companies expressing interest in acquiring a strategic equity stake. “The company evalu
ates such proposals, in line with the company’s policy to constantly endeavour to enhance overall shareholder value,” it added.
Reliance sources said that it was normal to get “inward and upward” at this point of time when the sector is looking ripe for consolidation. “Whether they would materialise is the actual question. Reliance could look at progressive offers and not sell out stake to raise money. Nothing is expected to be done in a hurry as there are some more issues to be discussed on the non-compete agreement,” said company sources.
Sources further said that at a time when major players have taken loans to pay 3G spectrum, companies could look for some dilution in the equity.
While declining to comment about Reliance, Etisalat’s chairman, Mr Mohammed Omran said the company was in talks with several Indian operators and are evaluating, but have not reached a final decision. “It may take a few weeks or it may take a few months. We think the Indian market is ready for consolidation,” added Mr Omran.
In 2008 Etisalat bought stake in an Indian telecom firm, which has been renamed as Etisalat DB Telecom India.