High valuation and big debt are the reason that RCOM is finding difficult to sell its Flag undersea cable network.
More than a month after putting its biggest global assets up for sale, Reliance Communications (RCOM) has found few callers for a package that includes its prized FLAG undersea cable network. RCOM had already extended an initial deadline of late-January for submissions once, but had still attracted little interest for the deal seeking $3 billion.
Singapore Technologies Telemedia â€” which owns stakes in Singapore’s StarHub and undersea cable operator Global Crossing â€” is planning a bid.
In a statement to Reuters, RCOM denied it was trying to sell any assets from its global unit, Reliance Globalcom, but said a total of $3.2 billion worth of investment has gone in the global business through December 2009. Sources and documents obtained by Reuters show the assets are up for sale.
In a statement, the company had said FLAG, the undersea cable network operator, spans 65,000 kilometres and described it as the world’s largest private undersea cable system. Three of the main assets in the sale package are FLAG, which RCOM bought for $207 million in 2003; Yipes, a California-based ethernet service provider purchased in $300 million in 2007; and Vanco, a British Telecom’s services provider purchased for $77 million in 2008.