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Reliance looks to sell Flag Telecom shares
19 January 2012
Reliance Communications considering $1.5bn share offer for Flag Telecom to reduce group’s debt
India’s Reliance Communications is looking to sell 75% of Flag Telecom, part of its Reliance Globalcom division, in an IPO in order to raise $1.5 billion via a listing on the Singapore Stock Exchange. This unit, which was acquired in 2003 for $211 million, manages five undersea cable networks spanning 65,000 kilometres.
This move by group owner Anil Ambani is aimed at lessening a debt load that resulted in its shares tumbling down 33% in 2011. A person close to the development told Bloomberg that the stake will be sold in the first half of 2012 and Flag Telecom would be listed under a business trust structure.
Reliance Globalcom also includes Yipes, a US ethernet network operator, bought in 2007 for $300 million, and Vanco, acquired in 2008 when the UK-based virtual network operator hit financial problems.
In 2011, Ambani was discussing selling Reliance’s mobile tower unit. Earlier talks with another Indian tower group, GTL Infrastructure, ended in August 2010. It was also reportedly in discussions earlier with private equity groups Blackstone and Carlyle to invest in Reliance Infratel.
An offering for Flag Telecom shares, which will be the first by an Indian firm in Singapore since 2008, would be biggest since March 2011 in Singapore. GTB
Further reading from Global Telecoms Business:
Private equity firms to buy Reliance's towers 14 Nov 2011
Reliance unit revamps submarine networks 07 Oct 2011
Reliance gets $1.93bn loan from China 10 Mar 2011
Flag Telecom plans $500m bond sale 15 Nov 2010
Interview: Kamran Sistanizadeh of Reliance Globalcom 13 May 2010
Reliance Comm seeks $3bn asset sale 15 Dec 2009
Reliance takes Vanco for less than 10% of previous value 27 May 2008
Reliance flags ethernet acquisition 01 Aug 2007