After hiving off its consumer business, Reliance Communications seems to have turned its attention to the sale of its undersea lines, data centers and domestic enterprise business.
Russia's Sistema JSFC (London: SSA) has emerged as the highest bidder for these assets, offering about $1.5 billion, according to media reports, including $300 million previously owed to RCom. Hong Kong's PCCW Ltd. (NYSE: PCW; Hong Kong: 0008) and I Squared Capital are also believed to have bid for RCom's assets.
In December, Reliance Communications Ltd. was forced to sell its consumer business to Reliance Jio, India's fastest-growing network operator, after racking up a huge debt of about $7 billion. Before that, it had closed down its operations on failing to land a merger agreement with Aircel, another mobile rival.
At the time, RCom had said it would focus on the enterprise and submarine cable business. The indications now are that it will leave the telecom business entirely.
Media reports further suggest that RCom's profitability has dropped following the divestment of its consumer business. This is mainly because its other businesses had relied partly on consumer facilities, including its network infrastructure. They have subsequently had to find costlier alternatives.
RCom already had close links with Sistema. It had acquired Sistema's Indian business, operating under the brand name of MTS, about two years ago. The merger was cleared by the Department of Telecommunications (DoT) as recently as October last year. As part of the deal, Sistema took a minority stake of 10% in RCom.
— Gagandeep Kaur, contributing editor, special to Light Reading