Dubai: Abu Dhabi-based Emirates Telecommunications Corporation, or etisalat, is in talks to buy a stake in India's Reliance Communications, a Reliance spokesperson told Gulf News Wednesday.
"Talks are happening but nothing is concrete," the person from India's second largest telecom company said.
He said the valuation of the company is about Rs500 billion (Dh39 billion) and a 25 per cent stake would be worth around Rs125 billion.
An Indian newspaper reported that etisalat is seeking a 25 per cent stake in Reliance Communications for about Rs180 billion. Negotiations are at an advanced stage and, if a deal is struck, etisalat would offer to buy another 20 per cent stake from the public, the Times of India said.
"We are talking to several Indian operators and are evaluating several Indian operators but have not reached a final decision," etisalat chairman Mohammad Omran told Reuters.
Omran declined to comment specifically about the Reliance report and said etisalat has not taken any final decision. "It may take a few weeks or it may take a few months," he said. "We think the Indian market is ready for consolidation."
Late last year, etisalat bought a 44.7 per cent stake in India's Swan Telecom for $900 million (Dh3.3 billion) and renamed it Etisalat DB. It launched services in March and said it would cover 15 circles in India and a population of over 900 million. Etisalat DB later announced a $2.2 billion infrastructure sharing-agreement with Reliance.
"Buying a small stake such as this has to be a strategic move and not just for profit. Etisalat is looking for a deal or a partnership that would provide interconnectivity benefits between Etisalat DB and Reliance," an Abu Dhabi-based telecom analyst said on condition on anonymity.
Indian regulations prohibit an entity from owning more than a 10 per cent stake in two or more companies. If etisalat acquires even a small stake in Reliance, it would either have to sell its share in Etisalat DB or work to merge the two companies.
"A merger is possible but unlikely as there are currently concerns surrounding DB's operations and pricing," the analyst said.
"I'm not sure if that would be in the best interest of etisalat right now," he said.
