Reliance to create joint venture with Citic for cable assets
23 May 2014 | Kavit Majithia
India’s Reliance Group is reportedly in talks with China’s Citic Telecom over the sale of part of its undersea cable assets.
In what would be a rare deal between an Indian company – owned by billionaire tycoon Anil Ambani – and a state-owned Chinese conglomerate, the tie-up would value the assets at $1 billion, with both companies taking a 50-50 stake.
Citic Telecom, owned by financial and industrial services company Citic Group, reportedly beat off bids from two other companies in the Middle East.
There are, however, still doubts whether the merger will be approved, given security concerns over links between the Chinese state and India’s telecoms infrastructure.
Ambani is renowned for building ties with China, and has signed loan agreements between Reliance and Chinese banks over the years.
Reliance is reportedly seeking a sale of its Global Cloud Xchange undersea cable division in a bid to reduce debt, as the company continues to struggle from slowing growth in India.
Last year it came close to selling the unit – which was rebranded from Reliance Globalcom – to Batelco, and to a consortium of private equity groups, with both deals failing to surface.
According to sources, the reduced $1 billion valuation of Reliance’s cable assets is largely down to the unit’s voice telecoms business being excluded from the deal.