RCom picks StanChart, DBS for Flag IPO

Reliance Communications is believed to have roped in global banking majors Stanchart and DBS as advisors for a US$1.5 billion (about Rs 7,500 crore) IPO of its undersea cable unit Flag Telecom in Singapore.

The IPO could involve RCom selling as much as 75 per cent stake for US$1.5 billion in Flag Telecom, which would be subsequently listed as a business trust in Singapore, sources said.

When contacted, a company spokesperson did not offer any comment. Flag Telecom was acquired by undivided Reliance Group for US$207 million (less than Rs 1,000 crore) way back 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.

In its bid to raise capital and lower its debts, RCom is also separately talking to private equity majors Blackstone and Carlyle for selling stake in its another unit Reliance Infratel, which handles telecom tower assets, in a deal estimated at over US$3 billion, sources said. Last year, a deal to sell stake in Reliance Infratel to tower major GTL Infrastructure for US$11 billion ( Rs 50,000 crore) fell apart.

In recent past, RCom has been exploring various routes of raising funds, including selling stake in its telecom tower arm — Reliance Infratel, a move that will help the company retire a major chunk of debt on its books.

As of quarter ended September 2011, RCom had total debt amounting to nearly Rs 32,000 crore. The company has received RBI approval for refinancing being provided by ICBC, CDB and EXIM for redemption of its outstanding Foreign Currency Convertible Bonds worth Rs 5,825 crore.