Monday, June 7, 2010

Reliance is looking for potential buyer to sell minority stakes

AT&T, the largest telecom operator in the U.S., is having informal discussions with Reliance Communications over acquiring minority stakes. Reliance is also in talks with Etisalat, the Abu Dhabi based mobile operator.

Wall Street Journal reported that Reliance is going to sale 26% stake which would enable the company to collect $1.8 billion at its current market value.

The decision of stake sales came after Anil Ambani, Chairman, Reliance Communications, and his brother, Mukesh Ambani, ended an agreement that forbade them from competing in each other’s business sectors.

Valued at $7.7 billion, Reliance Communications is currently the second largest mobile phone operator in India. It has a subscriber base of 105 million and it is the only operator without any strategic foreign investor in India. The company is now looking forward to move towards 3G network and it is now looking for potential investors.

AT&T is currently, the second largest mobile phone operator in the U.S with a subscriber base of 87 million. The company is now looking to expand its business.

Though India is one of the fastest growing mobile phone markets with mobile operators adding 17 million subscribers per month, its profitability is eroding quickly as the market is overcrowded. To keep up the growth rate is going to be a bigger challenge for the operators.

Bharti Airtel, the largest mobile phone operator in India is now looking into untapped markets outside India. The company is now finalizing a deal with Zain Telecom.

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