Globalcom's €2.2b price tag driving buyers away

Robert Clark | February 04, 2010

telecomseurope.net

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Reliance Communications has had trouble finding a buyer for its global business because of the high price.

Very few carriers have kicked the tires on Globalcom, the Indian firm’s global managed services and network business, because of the steep $3 billion (€2.16b) price tag, Reuters has reported.

Reliance Comm has already extended an initial deadline of late January for submissions but has still attracted little interest, Reuters said.

Singapore Technologies Telemedia, StarHub’s biggest shareholder and an investor in submarine cable firm Global Crossing, is reportedly considering a bid.

Industry sources confirmed to telecomseurope.net that Reliance has been shopping the assets. “But it’s an open secret – the asking price is very high,” an executive from a rival subsea carrier said.

Buyers were also frustrated by the limited financial information provided by Reliance and the excessively optimistic projections, Reuters said.

Company officials have denied in a statement to Reuters that the assets are for sale. Reliance did not respond to requests from telecomseruope.net today.

The Reliance Globalcom business includes assets it has bought in the past half a dozen years – the FLAG submarine cable network, Ethernet carrier Yipes and virtual operator Vanco – for a combined total of $584 million.

In Reliance Comm’s Q4 result, announced last week, revenue in the global unit – which also includes national trunk voice revenue - fell sequentially 12.5% to 19.8 billion rupees. Ebitda declined 20% to 4.2b rupees.

Source:

Robert Clark