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Anil rings telecom merger bell

Mumbai, March 11: Anil Ambani has initiated the process of putting in place a simpler and clearer holding structure for his telecom operations.

The board of Reliance Communication Ventures Ltd (RCoVL) will meet on Sunday to consider the reorganisation of its communications business, a move that may first see the merger of Reliance Infocomm Ltd (RIC) with RCoVL.

This could be a prelude to the eventual amalgamation of all operating entities that come under RCoVL with it.

RCoVL, at present, holds 45.34 per cent in Reliance Infocomm. The other operating companies in which it has stakes include Reliance Communications Infrastructure Ltd (RCIL) with a 45 per cent holding, Reliance Telecom (35.6 per cent) and World Tel Holding Ltd (WTL) where it has less than 4 per cent.

The reorganisation comes only days after RCoVL made a bumper debut on the stock exchanges. The scrip clocked a market capitalisation figure of Rs 35,470 crore at the opening price of Rs 290 per share on Monday.

After the listing, Anil Ambani had told reporters that the share price did not reflect the full value of all the telecom business since RCoVL only held a 45 per cent in RIC.

While the proposal to reorganise could therefore be seen as a move to gain better valuation for RCoVL, it is also part of Ambani's gameplan to consolidate all the telecom undertakings within his group.

Though officials from RCoVL were tightlipped about the board meet, observers feel that after the completion of all the mergers, the promoters stake in RCoVL is likely to go up. At present, the promotersí holding in RCoVL is put at 40.54 per cent with the rest distributed among institutional investors, public and others.

Among the operating companies, RIC is one of the largest wireless operators in the country, having a subscriber base of over 13 million. It has also forayed into the wireless-fixed access segment thus competing with the conventional landline market.

RICís income during the nine-month period ended December 31, 2005, stood at Rs 6813.70 crore. Its profit stood at Rs 25 crore.

The other stakeholders of RIC include RCIL with 14.39 per cent, Reliance Communications Technologies Ltd (31.32 per cent), Ambani Enterprises Private Ltd (5.37 per cent) and Panther Consultants Pvt Ltd whose holding stands at 3.58 per cent.

RCoVL is also the largest shareholder in RCIL, which provides telecommunication infrastructure services such as dark fibre to other telecom service providers. The other stakeholders include Ambani Enterprises Private Ltd with 33 per cent and Panther Consultants private Ltd with 22 per cent.

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