Reliance Communications said to approach Citic for sale of GCX business
Mumbai: Billionaire Anil Ambani’s Reliance Communications Ltd has approached Citic Telecom International Holdings Ltd as it makes a fresh attempt to attract a buyer for its undersea cable unit, people with knowledge of the matter said.
Reliance Communications is reaching out to potential acquirers for the Global Cloud Xchange business, known as GCX, as the Indian carrier explores further asset divestments to pay down debt, according to the people. Hong Kong-based Citic Telecom, which has a market value of about $1.1 billion, hasn’t decided whether to proceed with an offer, the people said, asking not to be identified because the information is private.
Citic Telecom had been in negotiations to buy Reliance Communications’s undersea cable assets in 2014 for more than $500 million, people with knowledge of the matter said earlier. Talks floundered after a management change at Citic Telecom, partly because its new chief executive officer wasn’t keen to pursue a deal early in his tenure at the Chinese government-backed firm, one of the people said in early 2015.
Shares of Reliance Communications have lost more than half their value in the past year amid mounting concerns about its ability to pay off debt. The carrier has struggled to retain customers in an increasingly competitive Indian wireless market after Reliance Jio Infocomm Ltd—led by Anil’s older brother, Mukesh—started last year with offers of free services.
Any transaction would add to the $91.4 billion in acquisitions involving Indian companies during the last 12 months, data compiled by Bloomberg show. Deliberations are at an early stage, and the structure of any potential deal hasn’t been finalized, according to the people. Reliance Communications could decide to keep the GCX business, and it may also attract interest from other suitors, one person said.
A representative for Citic Telecom declined to comment, while a representative for Reliance Communications didn’t immediately respond to emailed questions.
Reliance Communications said 2 June its lenders agreed to a seven-month moratorium on debt payments after its credit rating was slashed. Creditors are giving the company until December to sell its towers to Brookfield Infrastructure Group and merge its wireless business with Aircel Ltd. Bloomberg
Vinicy Chan in Hong Kong contributed to this story.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.