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Reliance Industries Ltd (RIL) is set to make a $5.7 billion non-binding offer to acquire a controlling stake in T-Mobile Netherlands BV, the country’s largest telecom operator, two people aware of the development said.

RIL is expected to make the offer within a month and has begun shortlisting lenders to fund the transaction, the people cited above said on the condition of anonymity as the discussions are private. Several top foreign banks are forming a syndicate for financing the acquisition, they said.

“RIL has been evaluating the deal for over three months now, and the discussions have progressed substantially since then," said one of the two people. “Akash Ambani, who leads Reliance Jio, is personally managing the transaction."

Dialling up funds
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Dialling up funds

Mukesh Ambani, Asia’s richest man, is trying to build a digital powerhouse with an array of apps and online services, diversifying away from its oil and refining business. Under Ambani’s leadership, Reliance Jio Infocomm became India’s largest telecom operator after re-entering the industry in September 2016.

“The T-Mobile acquisition will give Jio a foothold in the European telecom market and help it de-risk the business by diversifying into other markets,’’ said the second person.

A spokesperson for RIL did not respond to an email seeking comment.

On 10 August, Bloomberg reported RIL is working with an adviser to evaluate an offer for T-Mobile Netherlands, and Deutsche Telekom is seeking about €5 billion ($5.9 billion) for its stake.

T-Mobile Netherlands is a unit of Deutsche Telekom AG. The German company entered the Netherlands in 2000, acquiring a stake in a venture with Belgacom SA and Tele Danmark. The business was renamed T-Mobile Netherlands in 2003 after the German carrier bought the remainder of the stake.

It considered a sale of the unit in 2015 to raise funds to buy wireless frequencies in the US before deciding to keep the business. In 2019, T-Mobile Netherlands merged with Tele2 AB’s operations in the country to create one of the biggest local carriers. T-Mobile Netherlands is 75% owned by Deutsche Telekom, with Tele2 owning the rest. It has 5.7 million users.

T-Mobile also has a significant presence in the UK. In 2010, it merged with Orange UK to form a joint venture, Everything Everywhere, in 2010, which operated the T-Mobile and Orange brands until March 2015.

Through a separate subsidiary, Deutsche Telekom owns a substantial stake in T-Mobile US, the second-largest wireless carrier in the country, with 104.8 million subscribers.

Jio Platforms Ltd, a unit of Reliance Industries, holds the digital services businesses, including Reliance Jio Infocomm.

Reliance Industries has identified the digital services business as its principal growth driver alongside retail. In fiscal 2021, the company sold a 33.52% stake in Jio Platforms to a clutch of financial and strategic investors for 1.52 trillion. They include Google, Facebook, Intel and Qualcomm and top global private equity funds such as TPG and General Atlantic. Reliance Jio’s profit rose 45% to 3,651 crore in the first quarter of the current fiscal from 2,519 crore in the year earlier.

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