The board of telco Reliance Communications has approved the strategic sale of 26% equity at “at an appropriate premium to the prevailing market price”. The Announcement (a copy of it below) doesn’t explicitly spell out which entity is buying stake in the company, a specific timeframe within which the sale is to be completed, or, for that matter, the market price.

At the time of filing this report, the share price of RCOM was Rs. 171.2, up Rs. 3.05 for the day, higher than the Rs. 168.15 it had ended the last week at. Last month, the stock hit its 52 week low at Rs. 131.8, but has recovered since, particularly following speculation of a stake sale to UAE’s national telco Etisalat, or a merger with South African telco MTN. MTN has subsequently denied that it has been in talks with RCOM, reports Reuters. Etisalat hasn’t, and has in fact said it’s in talks with various companies regarding a stake purchase. The Times of India had quoted an unnamed source saying that in order to address an M&A policy  issue, Etisalat may sell its stake in Etisalat DB, which has launched services as ‘Cheers Mobile’. Who would buy their stake in Cheers, and why? Probably for spectrum allocation only, since there is barely a subscriber base to speak of.

The announcement:

The Board or Directors of Reliance Communications Limited has approved in-principle the induction of strategic / private equity investors into the Company for an upto 26% equity stake at an appropriate premium to the prevailing market price, and also examine and pursue other appropriate strategic combination / consolidation opportunities.

Related:

– RCOM FY10 Profit Down 23% To Rs. 4655 Cr; Q4-10 Profit Up 10% Sequentially
– Updated: RCOM Evaluating Proposals For Stake Sale; Reports Claim Etisalat In Talks, MTN Interested
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