RCOM may Sell 50% in Undersea Cable Biz to HK’s Citic
Talks for a JV may be wrapped up in 15 days; overall biz seen valued at up to $1.2 b
Reliance Communications is in exclusive talks to sell a 50% stake in its undersea cable business to Hong Kong’s Citic Telecom for $500 million (.`2,925 crore) to $600 million (.`3,510 crore), a person familiar with the matter said, as the Anil Ambani-controlled company steps up efforts to raise funds to pare debt. “The talks for a 50:50 JV (for the cable assets) are quite advanced. It should be wrapped up in the next couple of weeks,” the person told ET. The overall business is being valued at $1 billion to $1.2 billion. A spokesperson for India’s fourth-largest mobile operator declined to comment, while Citic Telecom didn’t respond to an emailed request, seeking comment. Global Cloud Xchange, formerly called Reliance Globalcom, houses RCOM’s undersea cable business, apart from offering cloud-based services. On its website, Global Cloud Xchange said its undersea cable system spans 67,000 route kilometres. Hong Kong-listed Citic Telecom is a unit of CITIC Pacific, and a part of China’s largest conglomerate, state-run Citic Group. RCom is among the most lever- aged of the Indian telecom operators, bogged down by the debt it had taken on to acquire bandwidth and fund expansion, and interest payment has been weighing on its finances for several years now. In the fourth quarter ended March, its finance cost rose to .` 907 crore from .` 749 crore in the third quarter while net debt stood at .` 40,178 crore. For several years now, the company has been trying to reduce debt by selling its stakes or of its units, but no deal has fructified so far. RCOM last year said it was in talks to sell stake in Reliance Globalcom to a consortium of private equity funds that included Samena Capital, and had also previously reportedly been in talks with Bahrain Telecom. The company has been refinancing parts of its existing debt with loans mainly from Chinese banks. Operationally though, RCOM’s key parameters such as average revenue per user and minutes of usage have been improving, in line with that of its bigger rivals amid with easing competition in the sector. IRG, a Hong Kong-based investment bank, is advising RCOM while Standard Chartered is advising Citic Telecom. Global Cloud Xchange gets most of its revenue from the more than 2,100 enterprises it services in several countries.
For several years now, the company has been trying to reduce debt by selling stake