Race to buy Tyco Global heating up

Due diligence by Tatas, Reliance.

The race to acquire the US-based Tyco Global Network is gaining speed, with both the Tatas and Reliance Infocomm having either conducted due diligence or are in the process of doing so.

While the Tata run-Videsh Sanchar Nigam Ltd (VSNL) has completed the valuation of assets and has also looked at the books of Tyco, Reliance Infocomm executives are understood to have winged their way to the US recently.

A public relations agency that represents the Tatas refused to comment. A Reliance Infocomm spokesman was also silent on the matter.

But Businessweek Online had reported that Tyco Global Network was v1alued at $3.5 billion during the height of the telecom boom in the late 1990s, and quoted an unidentified source saying VSNL was "looking hard, onsite, and doing due diligence".

According to the magazine, the source added that VSNL was considering a price in the low "$200 million range". VSNL, Businessweek Online said, had lots of inbound capacity but lacked outbound bandwidth.

It quoted Tata executive Firdaus Vandravala saying VSNL, which was building a submarine cable from Chennai to Singapore, did not have enough international capacity. "Tyco will give us global bandwidth and both Pacific and Atlantic capacity," he had said.

Tyco Global Network is the undersea cable business of US-based Tyco International. According to industry sources here, four companies had been shortlisted from the eight that had submitted initial price band indications for Tyco Global Networks' assets.

VSNL and Reliance Infocomm are among the shortlisted companies. The other companies that bid for Tyco Global include Singapore Technologies, the California-based Trinity Ventures and the US-based Pivotal Private Equity.

Investment banker Goldman Sachs has been roped in to auction Tyco Global. A source close to the development said, "The entire process will take at least three months, with the bidders concluding due diligence, submitting a final bid and getting approval from the shareholders of Tyco."

The Reliance group had acquired Flag Telecom and has been expanding its global networking capacity ever since. It has also planned Falcon, an undersea cable to connect Eqypt in the west and Hong Kong in the east.

On the other hand, VSNL will be able to get a worldwide link for its own traffic if it gets Tyco's 60,000 km-long fibre undersea business, which includes trans-Atlantic and trans-Pacific cables.

Besides, Tata Indicom's Chennai-Singapore undersea cable will also get ready access to customers on the trans-Pacific route.

Earlier, VSNL had also shown interest in Flag Telecom's Europe-Asia cable and had bid $180 million for it. However, it withdrew as Flag Telecom was up for sale and the asking price was too high.