TelecomLead.com Top 10 news in 2012: Reliance Communications’ $1.5 billion IPO

Telecom Lead India: Reliance Communications’ promoter Anil Ambani did not anticipate bad weather conditions during his plans to mobilize $1.5 billion through an IPO in Singapore.

Reliance Communications promoter Anil Ambani

The main aim of the IPO was to pare some of Reliance Communications’ Rs 35,839 crore debts. It is a whopping amount comparing with the debts of other telecom operators in India.

Anil Ambani, who was part of several fund raising programs for Reliance Group (when it was under his father Dhirubhai Ambani and family), could not digest the set back to $1-1.5 billion IPO of its undersea cable unit Flag Telecom in Singapore.

When the IPO flopped, Reliance Communications said “the company has decided to put on hold the IPO plans.”

Flag Telecom was acquired by the then undivided Reliance Group for $207 million (less than Rs 1,000 crore) in 2003. As part of the telecom portfolio of the erstwhile Reliance group, Flag Telecom later came into the fold of Anil Ambani-led group after the split between two Ambani brothers.

Sources said the IPO was put on hold on a day when institutional book building was to close. The IPO hit
roadblock due to adverse conditions to Reliance Communications in Indian mobile market. It is not to do with “adverse stock market” conditions.

The best example is the successful IPO of Bharti Infratel.

Bharti Infratel, the tower unit Bharti Airtel, mobilized around Rs 4,500 crore via its IPO in India. Despite poor demand from retail investors, the Sunil Mittal promoted company has set a price band of Rs 210 to Rs 240 a share.

According to Economic Times, Viom Networks, a tower company, is also looking at an IPO early next year.

Interestingly, Reliance Communications is yet to find a strategic partner or buyer for its tower unit.

Rating agency ICRA downgraded Reliance Communication’s long term rating from stable to negative and impacted the overall fund raising plan of the company.

The Reliance Communications unit got assistance from China Banks for its IPO. In addition, four sovereign wealth funds including Singapore’s Temasek Holdings and China Investment Corp agreed to invest in the IPO of Reliance Communications’ undersea cable unit Global Telecommunication Infrastructure Trust.

Last year, China Development Bank arranged a $3 billion syndicated loan for Reliance Communications and Reliance Power. That funding was used in part to buy Chinese telecom and power equipment.

The company will be in the market this year as well.

Note: TelecomLead.com’s editors have selected this news based on the impact it created on the industry and the sector.

Krishna Aravind
[email protected]

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