RCom plans $1.5 billion IPO of undersea cable unit Flag

The company is planning an initial public offering (IPO) of its undersea cable assets Flag Telecom, seeking a valuation of $2 billion. Under the offer, Flag Telecom will be listed as a business trust and Deutsche Bank is working on the deal

New Delhi: Anil Ambani-led Reliance Communications is looking at raising up to $1.5 billion (over Rs7,560 crore) through listing of its undersea cable unit Flag Telecom in Singapore, reports PTI.

According to sources, the company is planning an initial public offering (IPO) of its undersea cable assets Flag Telecom, seeking a valuation of $2 billion.

Under the offer, Flag Telecom will be listed as a business trust and Deutsche Bank is working on the deal, they added.

The deal may see selling of 75% stake in Flag Telecom.

When contacted, a company spokesman said, “Reliance Communications (RCom) continually works on various options to unlock value from its unique combination of global telecom assets, for the benefit of its shareholders.” 

RCom had acquired Flag Telecom, the undersea cable business, in 2003 for about $207 million.

RCom has been exploring various routes of raising funds, including selling stake in its telecom tower arm, Reliance Infratel.

Last year, a deal to sell stake to tower major GTL Infrastructure for $11 billion ( Rs50,000 crore) fell apart.

As of quarter ended September 2011, the company has a debt amounting to nearly Rs32,000 crore.

On Tuesday, RCom had announced that three leading Chinese banks have agreed to refinance its outstanding foreign loans worth Rs6,125 crore. This is the biggest ever overseas loan refinancing arrangement by any Indian company.

The refinancing for RCom’s outstanding FCCBs (Foreign Currency Convertible Bonds) worth $1,182 million (Rs6,125 crore) would be provided by Industrial and Commercial Bank of China (ICBC), China Development Bank (CDB) and Export Import Bank of China (Exim), among others.

RCom is the flagship company of Anil Ambani-led Reliance Group. The group has a networth in excess of Rs89,000 crore ($19.7 billion), cash flows of Rs10,900 crore ($2.8 billion), net profit of Rs3,600 crore ($0.8 billion).

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Telecom Commission for price discovery of spectrum through auction

The Telecom Commission has recommended that all spectrum allotments beyond 4.4/2.5-Mhz will be charged at market price, both from existing as well as new allottees, and the price for spectrum in the 800/900-MhZ band will be 1.5 times the price of spectrum in the 1800-Mhz band

New Delhi: The Telecom Commission has recommended that discovery of spectrum prices should only be through an auction in future, both for 4.4 MHz of start-up airwaves or additional bandwidth beyond this required by telecom operators from time-to-time, reports PTI.

The Telecom Commission has submitted its recommendations to telecom minister Kapil Sibal, who will take a final decision in this regard and also seek a Cabinet nod for the proposal.

According to sources, the Telecom Commission has recommended that all spectrum allotments beyond 4.4/2.5-Mhz will be charged at market price, both from existing as well as new allottees, and the price for spectrum in the 800/900-MhZ band will be 1.5 times the price of spectrum in the 1800-Mhz band.

In December last year, the Telecom Commission had taken a decision on the Telecom Regulatory Authority of India’s (TRAI) recommendations with respect to spectrum auction, pricing and merger and acquisition-related issues.

Besides spectrum pricing, the commission has recommended a uniform licence fee of 8% of adjusted gross revenue (AGR).

The telecom industry was demanding a lower licence fee of 6 per cent of AGR, while sectoral regulator TRAI had recommended a fee of 8% of AGR in a phased manner over a period of two years.

New guidelines will be put in place with respect to mergers and acquisitions. The merger of entities with a market share of up to 35% (based on subscribers and/or AGR) in wireline and wireless services should be permitted, the commission has recommended to Mr Sibal.

However, appropriate guidelines shall be framed for cases where the merged entities would have a market share of more than 35%, in consultation with TRAI and the concerned authorities, the source said.

Post-merger, an entity will not to be allowed to hold more than 25% of the spectrum in a service area.

TRAI had recommended that if an entity, post a merger or acquisition, has up to 35% market share, it would be considered in the ‘green line’ or safe harbour.

However, in cases where the market share is above 35% but less than 60%, the proposal was to be referred to TRAI, as per the sectoral regulator’s recommendations. Subsequently, TRAI will carry out a detailed examination to ensure that there is no abuse of market dominance, it added.

Spectrum sharing will be permitted in order to promote efficient utilisation of spectrum and TRAI will be entrusted with the task of carrying out a review of usage of spectrum and make recommendations in this regard.

In addition, the Telecom Commission has recommended that spectrum in the 800-MhZ and 900-MhZ bands will be refarmed at the time of renewal. TRAI will make detailed recommendations in this regard, the Telecom Commission has told Mr Sibal.

Furthermore, a study will be conducted regarding the need for additional spectrum to supplement rural coverage provided by telecom service providers on a purely commercial basis.

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Bharti Airtel faces Rs1,067 crore TDS demand related to global operations

The international taxation unit of the I-T department has held that such payments are in nature of fee for technical services and are subjected to TDS deductions as per section 195 of the I-T Act

New Delhi: The Income Tax (I-T) Department has slapped a Rs1,067 crore demand notice on telecom giant Bharti Airtel for non-payment of TDS (tax deducted at source) dues in the last four financial years in connection with its overseas operations, even as the company said it was fully compliant with all the provisions, reports PTI.

The department has asked the company to pay a total tax of Rs1,067.24 crore under Sections 201 (consequences of failure to deduct or pay taxes) along with Section 195 (any person responsible for paying to a non-resident) of the I-T Act.

“Bharti Airtel is fully compliant on all applicable income tax provisions. This demand notice, pertaining to applicability of withholding tax on payments made to international operators, is not justified and we will take appropriate legal recourse,” a company spokesperson said.

The payments, which the department said are to be made immediately, are for four financial years—2007-08 (Rs202.07 crore), 2008-09 (Rs329.913), 2009-10 (Rs313.577 crore) and 2010-11 (Rs221.681 crore) in lieu of payments made by the company to “non-resident mobile service providers”.

The international taxation unit of the department has, according to sources, held that such payments are in nature of fee for technical services and are subjected to TDS deductions as per section 195 of the I-T Act.

The department, in its notice, also said that for payments of such taxes, the location of the company's property or place of conducting the operations is not ‘relevant’.

Bharti Airtel offers a variety of telecom services both in India as well abroad.

The company claims to have a subscriber base of over 230 million across 19 countries.

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