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

The Economic Times - - Companies - OUR BUREAU

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

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