If you recall my post on DoCoMo buying stake in Tata Teleservices at a super premium, I had ended the post by saying,
Shall we now expect Anil Ambani to strike a deal at higher valuations
And ET is reporting today that RCom is looking for a strategic investor to pump funds to the tune of $4bn [Assuming Ambani succeeds in selling RCom at twice the valuation of Tata Teleservices, RCom’s curent stock price doesn’t justify this ]giving them a stake of slightly less than 20% in order not to trigger the open offer clause. RCom and BSNL are the only telcos in the India? without a foreign investor. However, we expect the prospective investor will demand for transparency in RCom’s operations, accounting and audit practices which are under fire from vaarious sources, already.
So what will RCom do with all the cash ? [ Assuming someone will BUY Anil Ambani’s Telecom Saga ]
The company is rumored to Buy-back its FCCBs which are quoted at a discount. However, Mint analysts say that this is a big hype and premature for the stock to rally. RCom needs big pile of cash for its ambitious GSM expansion as well as WiMax and 3G auction apart from the ongoing CAPEX in other verticals.
We have reliably learnt that Reliance GSM / SMART will be launched in major Indian cities across India on the 28th of DEC, coinciding the birth anniversary of Late Shri. Dhirubhai Ambani [The Polyester Prince]
With Reliance Infratel IPO taking a backsteat due to the current state of Equity markets, Anil Ambani has no choice but to knock the doors of PE and VC funds.