Report: Reliance Globalcom could sell stake in its FLAG cable system
Reliance Communications is looking for ways to raise some cash and it believes that by selling a big stake of its Flag Telecom cable system it could raise up to $1.5 billion, reports Bloomberg.
Citing an unnamed person close to the matter, Bloomberg reports that Reliance could sell 75 percent of its Flag Telecom submarine cable operations in an IPO and is looking for a valuation of up to $2 billion. Following the offering, FLAG would then be listed as a business trust.
However, some financial analysts believe the valuation is not realistic. Naveen Kulkarni, an analyst at MF Global Sify Securities Pvt. in Mumbai, said Reliance's valuation "looks slightly ambitious," adding that $1 billion "will be a more reasonable valuation," for the FLAG business.
In 2003, Reliance acquired the five cable, 65,000 km FLAG submarine cable system for $207 million.
The major driver of the proposed IPO would be to repay a large debt load that Bloomberg reports brought down Reliance's shares 33 percent lower in the past year.
Rohit Khanna, a Reliance spokesperson, said that the service provider works on various options to unlock value from its unique combination of global telecommunication assets, but would not comment on the IPO.
- Bloomberg has this article
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