Company plans to list up to 75% of its submarine network business.
Reliance Communications Ltd. Wednesday moved a step closer to cutting its massive debt, saying that the Singapore Exchange has approved a proposal to list its undersea cable operations in an initial public offering expected to raise more than US$1 billion.
While India’s second-largest telecommunication company by subscribers didn’t give details, a person familiar with the matter said the IPO will likely be conducted within this calendar year.
A successful IPO will come as a major relief for Reliance Communications, which is taking several measures to pare its about US$7 billion debt.
Apart from the IPO plan, it is cutting costs by outsourcing key jobs and trying to raise money by selling stakes in units.
But the IPO proposal comes at a time of gloom in primary markets worldwide.
In Singapore itself, weak market conditions forced motor sport franchise Formula One to recently put off a US$2.5 billion IPO — which would have been the city-state’s biggest initial public offering so far this year. In Hong Kong, a US$1 billion IPO by U.K.-based jeweler Graff Diamond Corp. was scrapped earlier this month for similar reasons.
Even in the U.S., the much-hyped Facebook Inc. IPO disappointed investors, with the stock consistently trading much lower than its offering price.
For Reliance Communications, owned by billionaire Anil Ambani, this will be the second attempt to sell a stake in its undersea cable business after it dropped a 2009 effort because it didn’t get the price it was seeking.
The current plan is to list through a business trust structure, which has a higher chance of success because it guarantees regular dividend payouts.
The listing plans comes close on the heels of a proposal by Indian hospital chain operator Fortis Healthcare Ltd. to raise about $360 million from a Singapore listing of a business trust that will principally invest in medical and healthcare assets and services.
Reliance Communications is planning to sell up to 75% of a cable network spanning 65,000 kilometers, which connects countries in Asia, the Middle East, Europe and the U.S., the person familiar with the matter said. The cables carry telecommunication signals across stretches of sea.