Flag Telecom shortlists merchant bankers

Flag Telecom, a fully owned subsidiary of Reliance Communications (a part of the Anil Dhirubai Ambani group), has shortlisted four merchant bankers, as it seeks to go public. These include Goldman Sachs, Deutsche Bank, Morgan Stanley and UBS. A final decision on the merchant banker of choice is expected to be taken by the end of the year.

Flag is expected to divest around 15%, as a part of the Ambani group strategy to unlock shareholder value. It hopes to list on the London Stock Exchange (LSE). According to merchant bankers, the company is valued at around US $ 1.5 billion to US $ 2 billion, which could go up with the company's plans for building new networks.

It has announced an investment of Rs 7,000 crore to set up a new generation network which will provide high speed transmission. The new network will link the Mediterranean region to Greece, Cyprus, Turkey, Malta, Libya and Lebanon, Trans Pacific to US and Japan, Far East and Africa.

This is expected to be up and running by 2009. The cash from the IPO would be used to partly finance the ambitious network project.

Flag runs an international fibre bandwidth globally. The company has a 65,000 km cable network spread over 40 countries across four continents as of date. It has over 200 international telcos and ISP as its clients.

Flag has recently completed Falcon, a US $ 400 million fibre project which links mid-east to the rest of the world.