Citic partner for RCom's undersea cable business?

FT says deal, if successful, will value biz at $1 bn

China’s Citic Telecom, listed on the Hong Kong Stock Exchange, is in talks with Reliance Communications (RCom) to buy into undersea cable assets of the Anil Ambani-led company, spreading over 65,000 kilometres, the Financial Times reported on Thursday, citing unnamed sources. RCom’s undersea cable business is the business delivery platform for about 40 key markets in India, Europe, West Asia, the US and Asia.

According to the report, an equal joint venture, if a deal is successful between the two companies, would value RCom’s cable assets at $1billion (Rs 5,829 crore). The British newspaper said Citic Telecom beat two other bidders from West Asia earlier this month for the venture.

“It is the policy of the company not to comment on speculation,” said a spokesperson of RCom.

Citic Telecom did not respond to an email seeking comments.

The Financial Times quoted Citic Telecom as saying it “engages in discussions with interested parties all over the world from time to time regarding potential co-operation”, adding the company did not comment on speculative reports as a policy.

Standard Chartered is advising Citic Telecom and Hong Kong-based boutique investment banking firm IRG is advising RCom, according to the newspaper.

If the deal goes through, RCom would be able to reduce its debt of $6.8 billion in the year ended March.

RCom has been in talks with a few companies and consortia to sell its undersea cable assets, wholly or partly; but these fell through.

Anil Ambani had said in the company’s annual general meeting last year the company was looking for buyers for its undersea cable business.

Last year, RCOM had informed the BSE that Reliance Globalcom, the owner of the undersea cable business, FLAG Telecom, was reportedly in advanced talks with a consortium of private equity (PE) firms led by Samena Capital to sell about 80 per cent stake. The consortium included Providance Equity Partners and Carlyle.

It has also previously held talks with Bahrain Telecom for the purpose.

In 2012, FLAG Telecom had planned an initial public offering to raise $1.25-1.5 billion, looking to divest about three-fourths of its equity. The listing, planned on the Singapore Stock Exchange, was later called off.