Mumbai, Maharashtra India (PressExposure) June 04, 2011 -- India's Anil Ambani group on Tuesday said it had received offers from several firms to buy a controlling stake in its telecom tower unit Reliance Infratel, after a deal collapsed last year.
Ambani's flagship firm Reliance Communications (RCom) said it has got "formal indicative offers" from several companies to acquire a controlling interest in Reliance Infratel.
The identity and number of bidders were not disclosed in the company's statement to the Bombay Stock Exchange.
"Completion of this transaction will facilitate RCom's objective to substantially reduce its overall debt," the firm said. RCom's net debt was $7.12 billion for the fiscal year ended March.
The board has approved the process to start due diligence, with an aim to complete the potential transaction "at the earliest", the company said. Last year, RCom's talks for a "transformational deal" with telecom tower firm GTL Infrastructure collapsed, as the deadline to seal the deal expired. The companies had proposed setting up an independent tower firm that would draw rival telecom operators to lease space, amid rocketing demand for infrastructure in the world's fastest-expanding cellular market. The deal would have created a combined transmission tower operation worth around 11 billion dollars, through which RCom was to spin off its 50,000 transmission towers to GTL for cash and stock.
The statement came a day after RCom reported a worse-than-expected drop in quarterly net profit -- its seventh straight quarterly fall -- as costs outpaced revenues.
Net profits at RCom slid nearly 87 percent to 1.69 billion rupees ($37 million) for the three months ended March from 12.2 billion rupees last year while revenues for the fiscal final quarter fell 65 percent to 78.76 billion rupees. Analysts had expected RCom to show a profit of three billion rupees. RCom is one of several Indian cellular firms that compete intensely in a fast-growing sector.
The flood of new players has unleashed a cut-throat price war, affecting the profits of most local telecom firms, with calls now costing less than a cent a minute in India.