Sistema has emerged as the highest bidder for the remaining assets of Anil Ambani-owned Reliance Communications at a total value of $1.5 billion, said three people familiar with the developments. The assets comprise overseas and enterprise telecom business and data centres.
Sistema JFSC’s bid stands at $1.2 billion (Rs 7,800 crore) in addition to about $300 million (Rs 2,000 crore) that Reliance Communications owes Sistema.
The Russian company is looking to fully buy out the Indian telco, but may have to do so in parts, said one of the persons mentioned above. Last week, Sistema made a bid for RCom’s undersea cables, data centres and domestic enterprise business.
“At the moment, the asset could even be valued at $2 bn, but that value is fast eroding as costs are mounting,” said one person close to the details. This sale would be the last of Anil Ambani’s association with telecom sector. The business reported nearly Rs 1,200 crore of operating profit when RCom last reported its quarterly results. However, now that Reliance has shut its mobile network, the overseas business is feeling the cost pressure.
“They used commonly leased office space, shared network resources, including servicing of the network,” the person said. Now, the remaining business has to incur those costs, which is fast eroding profitability, he said. Even some of the cost of the operating centre falls on the overseas arm.
RCom has been trying to optimize its operations by reducing the number of offices. It used seven offices, but has now centralized to just four, the person said. – Gadgets Now