Omantel, Temasek eye Flag Tele stake

Internet and telephony major Oman Telecommunications Company (Omantel) and the investment arm of the Singapore government, Temasek Holdings, have evinced interest in acquiring stakes in Flag Telecom, a fully-owned subsidiary of Reliance Communications.

Flag Telecom was looking at divesting upto 20 per cent of its equity stake through an international convertible bond issue and raise over $200 million.

According to sources close to the development, Omantel and Temasek are interested in acquiring stakes in the company. Apart from these two, two other companies had also shown interest in acquiring stakes in Flag Telecom. However, the names of other two players are not immediately known.

When contacted, a Reliance Communications spokesperson declined to comment.

It was also not clear what percentage of stake the two companies were looking at, with sources saying that Reliance Communications would transfer the stake on a preferential basis. This means that if both the companies were looking at acquiring the whole 20 per cent stake, then it might be allotted to the highest bidder.

The entry of more players would also mean that Flag Telecom would be able to increase its expectations from the present $200 million.

Flag had earlier entered a deal with Omantel to offer internet-based services like videoconferencing and triple play services, apart from provision of voice, data, plus video through a single pipe between West Asia and Africa.

Flag Telecom was also mulling of laying a submarine cable to Oman and link the country to Africa.

Reliance had acquired Flag Telecom in 2003 for $207 million, and at present it is valued at around $1 billion. The company has operations in over six continents, with landing stations in 28 countries.

The company has also commissioned a new submarine cable, 'Falcon', connecting India to West Asia.