US and European telecoms groups and other investors are in talks to buy up to a 26 percent stake in India's Reliance Communications, a report said Thursday.
The Economic Times, a leading Indian financial daily, said foreign investors were in discussions to take a 20-to-26 percent holding in India's second-largest cellular operator, which is led by tycoon Anil Ambani.
The deal would hinge on whether Reliance Communications, known as RCom, can get a premium over its current share price, the newspaper said, citing an unidentified banker with knowledge of the discussions.
The report pushed up RCom's shares by 4.86 percent or 11.10 percent to 239 rupees, outperforming the overall market which was down half a percent.
RCom's market capitalisation has fallen by 70 percent in the past year to under 10 billion dollars amid a slide in India's stock market.
The report named no specific suitors for RCom but foreign telecom companies have been rushing to take stakes in the Indian cellular market, the world's fastest growing, adding about 10 million subscribers monthly.
RCom belongs to the Anil Dhirubhai Ambani Group which Ambani controls and is one of the few Indian telecom companies without a foreign partner.
Ambani holds a 67 percent stake in RCom, which has 58 million clients.
Earlier this year, RCom entered tie-up talks with South Africa's MTN Group but failed to strike a deal.
Reliance Communications' spokesman said he had no comment on the latest report.
Funds raised by RCom via the transaction could be used to buy third generation (3G) licences in an upcoming government auction and for network rollout, the report said.
Analysts estimate RCom will have to pay more than 500 million dollars for 3G spectrum and invest an additional one billion dollars for network rollout.
While foreign companies can bid for 3G spectrum, they need an Indian partner as rules do not allow more than 74 percent foreign ownership in Indian telecoms firms.
Last year, Britain's Vodafone group bought a controlling stake in the Indian unit of Hutchison Telecom. In November, Japan's NTT DocoMo bought a 26 percent holding in TataTeleservices, while the previous month Norwegian operator Telenor announced plans to buy 60 percent of India's Unitech Wireless.
Source: AFP