Reliance Communications denies reports on Flag sale
14 Dec 2009
Reliance Communications Ltd is looking to sell its undersea fibre optic network as well as its US network business, hoping to raise around $3 billion (Rs14,000 crore) in cash, CNBC-TV 18 and other media reports said quoting unnamed sources.
The company itself said, "We vehemently deny these speculations and rumours." Nonetheless, the speculation was enough to pull down the shares of the company on the stock exchanges.
Reliance acquired the FLAG network, which is at the heart of its global operations, in 2003 for $207 million (around Rs1,000 crore), and now sells both network capacity as well as telecommunication services to other carriers and companies around the world at highly competitive prices.
The reports said that RCom, an Anil Ambani group company, had hired Deutsche Bank to advise it on the sale and that bids were due in late January. Deutsche Bank, too, declined to comment.
The FLAG business, which stands for 'fibre-optic loop around the globe, is run by Reliance Globalcom, the company's overseas arm.
Reliance is also selling Yipes, a California-based ethernet service provider it bought in 2007, according to the reports. Yipes, which was renamed Reliance Enterprise Solutions, provides managed services for companies in the United States.
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