Reliance Communications (RCom) has started preliminary talks with China Mobile, the world’s largest mobile company, for a strategic alliance and possible equity participation of 5 to 6 per cent, according to sources. In February, Wang Jianzhou, China Mobile’s chairman and CEO, said at the Mobile World Congress in Barcelona that the company was keen to expand to India. China Mobile has over 450 million subscribers. RCom, which offers CDMA mobile telecom services and started GSM services a few months ago, has over 70 million customers.

 

RCom is expected to require cash to bid for licences for third-generation (3G) services, auctions for which are expected later this year. The reserve price for the auction has been set at a steep Rs 4,040 crore. The company recently announced that it would like to issue equity shares to qualified institutional buyers to finance its 3G bid, expand its broadband business and bolster its financials. With a net worth of over Rs 63,000 crore, the company has cash flows of over Rs 12,000 crore.

 

The China Mobile is listed on the New York Stock Exchange and has operations in Pakistan, where it acquired Paktel for $460 million in 2007 and renamed the company CMPak. It also operates mobile services in Hong Kong and recently bought a stake in Far East Tone Communications which operates mobile services in Taiwan.crackcrack
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