Paris/Mumbai, June 23 (Reuters) - Vivendi, Europe’s largest entertainment group, said on Wednesday it was not in talks to buy a 26% stake in Reliance Communications.
Economic Times said Vivendi, which has telecom operations in France, Morocco and Brazil, had been talking to Reliance for a month and discussions were at an advanced stage, citing a person with direct knowledge.
Reliance Communications, the No.2 mobile carrier in India’s fast-growing market, is burdened by debt and the cost of rolling out third-generation (3G) services. It said earlier this month its board had agreed to sell up to 26% of the firm.
The company has a market capitalisation of Rs38,400 crore ($8.6 billion) and is majority owned by billionaire Anil Ambani’s Reliance conglomerate.
Vivendi spokesman said the company was not in any talks with Reliance Communications.
But Vivendi shares were down 2.8% by 0900 GMT, the leading decliners in a 0.7% weaker European media index, as investors fretted the company might be considering going on the acquisition trail again.
“We think Vivendi has only €0.7 to 1.0 billion ($900 million to $1.3 billion) of headroom under its Baa2 rating and so has no capacity for a deal,” UBS analyst Polo Tang wrote.
“Our recent upgrade to Buy was a valuation call based on absence of near-term M&A, given balance sheet constraints.”
Vivendi is due to receive $5.8 billion late this year or early next year from the sale of its stake in US broadcaster NBC Universal to General Electric.
It could use the proceeds to buy out minority shareholder Vodafone from its SFR telecoms unit.
But Vivendi has also shown appetite for acquisitions in fast-growing economies to counter the far slower growth at home, most recently buying control of Brazilian telecoms operator GVT for about 7.5 billion reais ($4.3 billion).
Since Reliance Comm’s stake sale announcement, speculation has been rife that global firms like AT&T or South Africa’s MTN Group could partner with the company. Both firms have denied being in discussions on a deal.
Although competition is cut-throat, India is the world’s fastest-growing major mobile market and the second-largest globally, with more than 600 million users..
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