RCom dials new allies

[1]

The Anil Ambani- led Reliance Communications (RCom) board has approved the stake sale of 26 per cent.
India’s second largest mobile company Reliance is looking for a deal as its debt burden has increased due to the huge payment it made for the 3G spectrum at a time of intense competition in the market.

The names of UAE-based Etisalat and South African telecom giant MTN are doing the rounds as the two firms interested in Reliance.
The strategic partner or private equity investors will be incorporated at a premium, said RCom. The shares of the company, which gained 14 per cent last week on reports of a deal were trading at Rs 168.15 on Friday. This gives the company a market cap of Rs 34,706 crore and at that price, 26 per cent stake in the company will be around Rs 9,023.5 crore.
RCom is the only company among the top three telecom firms which doesn’t have a foreign partner. SingTel has a significant stake in Bharti Airtel and Vodafone has majority stake in Vodafone-Essar.
Keeping its rising debt levels under control seems to be a major reason for RCom to seek fresh equity. RCom has a total debt of just under Rs 20,000 crore at the end of FY10.
Since then, the company had to raise an additional debt to pay Rs 8,585 crore to the government for 3G spectrum. It is also bidding for broadband spectrum, where the cost of a pan-India licence is Rs 10,000 crore.