Reliance Communications and MTN may swap shares

South Africa's MTN Group and Reliance Communications are discussing a possible combination, just days after India's top mobile firm Bharti Airtel ended talks with MTN after failing to agree how to structure a deal.The Two companies may swap shares or take big stakes in a new company as regulatory hurdles and both firms' global ambitions seem to rule out a $66 billion emerging markets telecoms merger.

Analysts said Reliance Communications' chairman, Anil Ambani, who owns two-thirds of India's No.2 mobile operator,like Bharti Airtel would also not want to cede control, casting doubt on media reports that MTN, valued at around $38 billion, planned a reverse takeover of Reliance, which has a market value of about $28 billion.

The two firms might transfer shares to a separate entity in which they would both hold significant stakes, or swap shares in a way to get around potential regulatory hurdles.MTN could take a stake of below 15 percent in Reliance Communications, avoiding having to make an open offer for a further 20 percent, and Reliance could take a minority stake in MTN that avoids regulatory triggers.

Read more in The Economic Times article.

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RCom, MTN in exclusive talks over merger

Anil Ambani group company Reliance Communications on Monday announced entering into an exclusive negotiations with South Africa's telecom giant MTN to discuss potential combination of their businesses.

The development comes just two days after South African company deviated from agreed terms with India's largest telecom player Bharti Airtel, who pulled out of 3-week long negotiations.The two companies have agreed for a 45-day exclusivity to work out the details for merging their businesses.

If the negotiations are successful, the combination of MTN and Reliance Communications would create a global wireless juggernaut, larger even than developed-market giants such as AT&T.

Last week, Bharti Airtel had decided to pull out as MTN had proposed a structure which would have made the Indian telecom giant a subsidiary of South African company, contrary to the agreed terms between the two firms prior to entering the discussions.

Read more in The Economic Times article.

Reliance Comm buys UK's Vanco for $77 mn

Reliance Communications Ltd, India's No.2 mobile operator, said today that its Reliance Globalcom unit has bought UK-based global managed network services provider Vanco for $77 million.

Reliance Communications, which earlier on Monday said it had started exclusive talks with South Africa's MTN Group that could create a $63 billion telecoms giant, said the acquisition of Vanco would add $365 million in annual revenue.

Reliance Globalcom will pay $76.9 million for "100 percent equity of Vanco Group free of debt",.

BSNL plans mega-IPO of Rs 40,000 crore

State-owned Bharat Sanchar Nigam Ltd (BSNL) is preparing for the country’s largest initial public offering (IPO) of around $10 billion (Rs 40,000 crore) slated sometime next year.The issue has been discussed by the board and is awaiting government clearance.

The plan is to divest 10 per cent through the IPO, which values India's largest telecom company at $100 billion (Rs 400,000 crore), which is larger than the combined market capitalisation of Bharti Airtel at $46 billion (Rs 183,283 crore) and Reliance Communications (RCom) at $41 billion (Rs 163,683 crore), respectively the second- and third- largest telecom companies.

The plan that it might go public was announced by Communications Minister A Raja on the sidelines of a press conference at which BSNL announced an insurance cover for 33.7 million of its subscribers.

The announcement comes a day before the $3 billion (Rs 11,500 crore) IPO by Reliance Power, owned by the Anil Dhirubhai Ambani Group, the largest initial share offering to date.

Read more in The Business Standard article.

RCom completes takeover of Yipes Holdings

Anil Ambani group company Reliance Communications today said it has completed the acquisition of US-based Yipes Holdings in an deal valued at around Rs 1,200 crore.The acquisition, which was announced in July this year, would give the company access to a Rs 4,00,000 crore global enterprise data market, RCom said in a statement.

It has received all necessary approvals from the US Federal Communications Commission (FCC) for the transfer of control of Yipes, the statement added.Yipes has strategic network presence in the top 14 US metros, which account for 40% of the total US datacom market and also has nearly 1,000 enterprise customers.

The company would expand Yipes presence to 40 new markets globally including Middle East, Asia and India. By synergizing Flag and Yipes, Reliance is poised to become the global leader in Ethernet, which is expected to reach Rs 1,00,000 crore ($25 billion) market by 2010, it said.

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RCOM to offload 10% in tower arm via IPO

Reliance Communications is likely to list its tower arm — Reliance Telecom Infrastructure Ltd (RTIL) — by March. The company which has already offloaded 5% stake in RTIL to outside investors, plans to sell an additional 10% in the company through an IPO.

The valuation of the company as per its 5% equity placement in July to seven institutional investors from the US, Europe and Asia was about Rs 27,000 crore. It is also learnt that the promoters (Reliance Communications) will sell shares and therefore there would not be a fresh issue of equity.

RCOM’s primary competitor Bharti Airtel, which is currently in the process of transferring its mobile telecom towers and related infrastructure to Bharti Infratel, has already prepared a road map which would allow the company to divest a majority stake in its tower arm in the future.

After the completion of the demerger, Infratel will enter into comprehensive sharing agreements with other service providers while Bharti in time would divest a majority stake and may also go for an IPO, thus making it a completely independent company, Bharti Airtel chairman Sunil Mittal said.

RCOM Names 7 PE Investors In Tower Company; Plans IPO Or Strategic Sale

Reliance Communications (RCOM) has finally announced the list of investors in its tower arm Reliance Telecom Infrastructure Ltd (RTIL). They include Fortress Capital, HSBC Principal Investments, Galleon Group, New Silk Route, GLG Partners, Quantum Fund (George Soros) and DA Capital. The breakup of the investments is not provided. The seven investors have picked up 5 per cent in the company for $337.5 million, valuing the company at $6.75 billion or Rs 27,000 crore.

A communication to the stock exchange said that the "sales proceeds from the transaction amounting to Rs 1,400 crore have been received in full, and the capital gains of Rs 1,200 crore ($289 million) have been booked and will be reflected in the results of Reliance Communications Group in the current quarter, i.e. Q2 2007-08."
RTIL's equity valuation of Rs 27,000 crore ($ 6.75 billion) translates into approximately Rs 135 per RCom equity share. RCOM's remaining 95 per cent stake in RTIL is valued at $6.40 billion (Rs 26,000 crore). But what is important is RCOM plans to further unlock value in RTIL. The statement says the company plans to "pursue opportunities for further unlocking of value through an IPO or strategic sale at an appropriate time".

Bharti, Tatas, RCOM officials in Kenya for 51% in Telkom

India’s leading telecom companies are on an African safari. Bharti Airtel, Reliance Communications and the Tatas are in the race to acquire a majority stake (51%) in Telkom Kenya.

Even as these companies refused to confirm the development, it is learnt that their representatives (along with other global telcos) are currently in Kenya as part of the two-day Telkom Kenya bidders’ conference which kicked off in Nairobi on Tuesday.

The India companies will have to compete with other global majors such as British Telecom and Dubai-based Vtel Holding who are also learnt to be in the race. Last year both Bharti Airtel and Reliance Communications had lost the race to acquire a mobile licence in Kenya.

Just last month, the Kenyan government had agreed to double the stake for sale in Telkom Kenya to 51% after repeated requests from potential investors. However, as per the terms specified by the Kenyan government, the successful bidder (over a period of time) would have to reduce its stake to 40% by selling 11% shares to the public.

At the same time, the government will also divest a further 19% to the public. This implies, the final shareholding pattern of Telkom Kenya would be 30% by the government, 40% by the successful bidder and 30% by the public.

Read more in The Economic Times article.

RCom sells 5% stake in tower biz -Video

Anil Ambani, chairman, Reliance Communications, today announced unlocking value of the tower company, Reliance Telecom Infrastructure, by selling 5% stake based on a valuation of Rs 27,000 crore.

The value of the tower business has been pegged at Rs 135 per share, Ambani said.The transaction will result in a cash inflow of Rs 1,400 crore.Ambani said that more infrastrcture was needed to keep adding over seven million customers per month.

The company would have 100,000 tenancy rights by March 2008, he added.

RCOM to offload stake in Flag Telecom

Reliance Communications (RCOM), the country’s second-largest wireless company, will adopt a three-pronged approach to unlock value for its shareholders.

RCOM will adopt a three-pronged approach to unlock value for shareholders and will also increase dividend payments to shareholders steadily.The company is in an advanced stage of selling a minority stake in Reliance Telecom Infrastructure India Ltd, its towers unit, to financial investors.

The company also plans to list the telecom tower unit on the local bourses. In the past four years, it has set up 14,000 towers and targeted 23,000 towers by the end of current calendar year.

Read more in The DNA Money article.

DLF shares rise 11%; 8th most valued firm

Shares of DLF Ltd jumped 10.85 per cent in the real estate major's second coming to the capital market, making it the eighth most valued firm on the bourses in terms of market capitalisation.

The scrip listed at Rs 582 on the Bombay Stock Exchange against the issue price of Rs 525 and soared to a high of Rs 714.25, briefly propelling the market value to over Rs 100,000 crore.

Billionaire KP Singh-promoted DLF, which had delisted from Bombay Stock Exchange in 1982, was ahead of ICICI Bank and State Bank of India in terms of market cap. Only Reliance Industries, ONGC, Bharti Airtel, NTPC, Infosys, TCS and Reliance Communications had higher market value on BSE.

In the first 15 minutes of trade, the scrip reported turnover of around Rs 330 crore as around 60 lakh shares changed hands on the BSE.The company had offered 17.5 crore equity shares through 100 per cent book-building process. The proceeds of the issue, which got oversubscribed 3.5 times, would be deployed to meet costs of construction, land acquisition and repayment of debt.

Read more in The DNA Money article.

Spice Communications raises $128 mn from public issue

Spice Communications Ltd, an Indian mobile phone venture partly owned by Telekom Malaysia Bhd., raised Rs520 crore ($128 million) in an initial public offering as investors try to tap a market whose numbers almost doubled in 2006.

The Noida-based company priced the 113.1 million new shares at Rs46 apiece, the top end of a Rs41-46 range, according to an email sent to investors. The stock will trade on the Bombay Stock Exchange.

The mobile operator and larger Indian rivals, led by Bharti Airtel Ltd and Reliance Communications Ltd, are attracting investors trying to get access to the world’s fastest-growing market last year. Spice, which offers its services in the southern state of Karnataka and Punjab in the north, plans to spend $140 million during the next two years to boost coverage.

Last month, Spice sold stakes worth $10.1 million each to Lehman Brothers Holdings Inc. and Spinnaker, the company said.Enam Financial Consultants Pvt. Ltd and UBS AG arranged the Spice share sale.

Read more in The Livemint article.

Idea, Spice Tele may call off deal

Idea Cellular and Spice Telecom might call off their proposed merger talks. The two companies were unable to come to terms on the valuation, and also on the future structure of the management to run the merged entity.

According to a source close to the development, Spice Telecom will go ahead with its planned initial public offering (IPO).

“The deal seems to be off, at least for the moment. Valuation is believed to be key issue, while differences in sorting out of management and operational issues of the joint company also played a part,” the source told Business Standard today.

Spice Telecom, which has received approval from the Securities and Exchange Board of India, would go ahead with its Rs 600 crore IPO.

The combined entity would have had a market share of over 11 per cent in the mobile space. However, even after the merger, the company would remain the fifth largest mobile operator in the country-far behind Bharti, Hutch, BSNL, Reliance and Tata Teleservices.

Read more in The Business Standard article.

9 giants in race for RCoM's tower biz

As many as nine investors are currently in talks with Reliance Communications (RCOM), the country’s second-largest wireless service provider, for picking up a minority stake in its telecom infrastructure business. RCOM is currently in the process of spinning off its telecom infrastructure into a separate company — Reliance Telecom Infrastructure Limited (RTIL).

According to RCOM sources, the companies that are currently engaged in carrying out due diligence of RTIL include global tower infrastructure majors— Tower Vision and American Towers, private equity investors—Apax Partners; Carlyle; and Temasek, the private equity arms of HSBC and Deustche Bank, and financial investors—George Soros, Blueridge and US-based Tiger.

The company is looking to divest up to 26% stake in RTIL to strategic investors and has been in negotiations with many investors over the last 2-3 months. Sources in the industry say the deal could be in the range of $1 billion for a minority 26% stake in the telecom major’s tower business, pegging the valuation of the tower company at $4 billion.

Read more in The Economic Times article.

DLF to rank among top 10 m-cap scrips

Post-listing, real estate major DLF will find a place among the top-10 companies in terms of market capitalisation.

The Delhi-based company’s total enterprise value stands at Rs 85,221 crore on the lower side of the price band of Rs 500 a share on the total equity capital of Rs 340.88 crore of Rs 2 paid-up equity share.

The company yesterday announced a price band of Rs 500-550 a share for its upcoming mega initial public offer (IPO) of Rs 9,625 crore.

On the higher side, DLF’s current enterprise value stands at Rs 93,743 crore. DLF will occupy the eighth position in terms of market capitalisation ranking, after Reliance Communications (Rs 1,03,110 crore) and before ICICI Bank (Rs 82,119 crore).

The company’s enterprise value of Rs 85,221 crore constitutes 50 per cent of the total market capitalisation of real estate stocks listed on the Bombay Stock Exchange (BSE). It is almost 100 per cent of the total market value of real estate stocks.

The real estate sector will cross the market capitalisation of Rs 1,70,000 crore after the DLF listing. The sector will be among the top-ten sectors after telecommunication, oil exploration and power and ahead of pharmaceuticals, steel and engineering sectors. Unitech with a market capitalisation of Rs 44,403 crore tops the list of the construction sector.

Rel Comm to list Flag, tower biz in 6 months

Reliance Communications is looking at unlocking value for shareholders through an array of activities including listing its wholly-owned subsidiary, Flag Telecom, and the recently spun-off tower business. It has also earmarked a capital expenditure of Rs 10,000 crore for the current financial year.

Addressing the media today, Anil Ambani, chairman, Reliance Communications said: "We are looking at unlocking shareholder value through various modes like the listing of Flag Telecom and tower business or by roping in strategic investors and strategic partners or private equity majors. We will do this in the next six months."

Reliance Telecom Infrastructure was spun-off into a separate entity with the tower business in oder to reduce set-up and operating costs resulting in cost efficiencies and providing greater financial flexibility. It has 12,000 towers and a networth of Rs 3,000 crore. The company is planning to set up another 8,000 towers, increasing its total number of towers to 20,000 by next year.

Ambani said the expansion plans of the company would be funded through debt, “which would be non-recourse to Reliance Communications”.

The company has also announced a capital expenditure of Rs 10,000 crore for both CDMA and GSM operations. This would also include foray into 3G and 4G technologies, while the company is expecting releasing of spectrum by the end of this quarter.

MTNL may bid for 26% in Telkom Kenya

The Kenyan government had recently invited bids for the 26% stake in the state-owned landline company, which has about 300,000 customers and an average revenue per user of about $40 per month. The successful bidder will be announced on September 25 and the dateline for signing the deal is October 17. Kenya also plans to sell additional 34% stake in Telkom Kenya through an IPO after identifying a strategic partner for the company.

MTNL, which offers both fixed line services in Mumbai and Delhi, plans to bid for 26% equity stake in Telkom Kenya. According to MTNL sources, the company was planning to bid for the 26% stake for Telkom Kenya as it had lost the bid to acquire a mobile license in the African country last year.

The IPO date will be finalised only after consultations with the successful bidder for the 26% stake. The International Finance Corporation is the transaction advisor to the Kenyan government for the deal.

Read more in The Economic Times article.

Three firms in race for RComm's $1.5 bn deal

Telephony major Reliance Communications is believed to have short-listed three global IT companies – IBM, EDS and T-Systems – for its $1.5 billion outsourcing contract.

A high-level internal committee of the Anil Ambani group company is expected to finalise one of the vendors for the 10-year deal in 6-8 weeks, sources close to the development said today. A RComm spokesperson refused to divulge the names of the short-listed vendors. He, however, admitted that the company was in talks with leading IT services vendors, which include large global players.

US IT major IBM has a strong presence in India and had recently announced its intention of focusing on IT outsourcing contracts from the country. If finalised, this would be the second major contract for the company as the Big Blue had earlier bagged a $800-million outsourcing contract from GSM major Idea Cellular.

Texas-based Electronics Data Systems, popularly known as EDS, is a market leader in the US and Europe and has been providing IT services and support for the last 40 years. T-Systems, the subsidiary of German telecom major Deutsche Telekom, is also one of the major players in the IT sector with expertise in managing IT requirements for telecom companies.

Earlier, RComm’s Internal Committee had decided to outsource its information technology requirements for 10 years to a technology service provider. The company was planning to outsource its wireless, enterprise and international business, under a $1.5 billion deal that was considered as one of the biggest in the Indian telecom outsourcing sector.

The move is expected to reduce the company’s projected IT spends “significantly” and also enable it to remain asset light. Industry analysts opined that the company would save 20 per cent by outsourcing and would also enable it to concentrate on its core competencies.

RComm had earlier earmarked a capital expenditure of $2.5 billion for this financial year that would be spread across its three business segments – personal, enterprise and international.

RComm’s mobile business has a subscriber base of close to 30 million, growing by over a million subscribers every month for the last 10 months. The company also has a 50 per cent plus market share in the enterprise market with around 1,000 top corporates in its client list.