Indian Stock Market

Reliance Industries will be buying 60% in Carrizo Oil & Gas shale gas unit.The shale gas asset is at Marcellus Shale region.

This is third such Shale gas investment by RIL. I guess reliance is trying to spend the huge cash flows it has been getting.Good idea indeed. Company has been diversifying. My guess is company shareholders will be rewarded hugely when the company de-merges all business.

“Why Reliance is going so aggressively into shale gas is because reports indicate shale gas output will replace about 25 per cent of conventional gas production in the US over the next decade,” Sonam Udasi, head of research at IDBI Capital, said on Thursday.

“This is a longer-term plan to be one of the key five to six companies in the shale business in the world’s biggest energy market, the United States,” he said.

Oil companies including BP Plc, Total, Statoil and Mitsui & Co have bought into shales, rock formations that could hold vast amounts of natural gas.

Under the latest deal, Reliance will pay $392 million, comprising of $340 million of cash and $52 million to develop assets in the Marcellus Shale gas project — one of the most promising natural gas deposit regions in the United States.

The region, according to some geologists, could hold enough natural gas to satisfy US demand for a decade.

Under the deal with Carrizo, Reliance is paying about $6,200 per acre for its share of the Marcellus acreage. The company, at the forefront of India’s push in shale gas, had paid around $14,000 an acre under its deal with Atlas.

Reliance shares traded flat on Thursday in a Mumbai market up 0.2 per cent. Carrizo shares closed flat at $20.1 on Nasdaq on Wednesday.

While the shale formations have proven to be lucrative, they are also very expensive to develop and environmentally sensitive.

Joint ventures have given the independent oil companies, who own much of the acreage in these areas, access to capital and should allow foreign oil firms to pick up expertise in new drilling techniques developed for the shales.

COSTS

Reliance’s $52 million contribution to drilling costs will provide for 75 per cent of Carrizo’s share of development costs over an anticipated two year development program, the Indian company said in a statement on Thursday.

The deal is expected to close by mid-September.

The joint venture will have about 104,400 net acres of undeveloped leasehold in the core area of the Marcellus Shale in Central and Northeast Pennsylvania, of which Reliance’s 60 per cent interest will represent about 62,600 net acres.

Reliance will buy 20 per cent of Carrizo’s interest in a JV the US company has with an affiliate of private-equity firm Avista Capital Partners. Reliance will buy all of Avista’s interest in the JV.

Carrizo will serve as the development operator for the joint venture and Reliance has the option to act as a development operator in certain regions in the coming years as part of the joint venture.

Jefferies & Co Inc acted as lead financial advisor and Vinson & Elkins LLP acted as legal counsel to Reliance. BNP Paribas and Credit Agricole Corporate and Investment Bank provided strategic advice to Reliance.

Reliance and Essar trying to get BP’s African Retail operation

Mukesh Ambani-run Reliance Industries and Essar Oil are among about half a dozen firms in race to buy crisis-hit British energy giant BP’s fuel marketing assets in east African countries.

BP is selling retail outlets, terminals and aviation fuel stations in Botswana, Tanzania, Namibia, Malawi and possibly also in Zambia, to cover costs related to the worst oil spill in US history, industry sources said.

Reliance and Essar have offered between $400 to 500 million for BP’s assets in the East African nation, they said.

A South African firm and National Oil Corp of Libya are said to be other serious bidders among about half a dozen firms who have evinced interest.

While Essar Oil spokesperson did not offer any comments, a Reliance spokesperson said: “We do not comment on market speculation as per company policy.”

Sources said Reliance may be looking at supplying gas oil, gasoline and jet fuel from its twin refineries at Jamnagar in Gujarat to the east African nations.

It also exports fuel to Gulf Africa Petroleum Corp, a firm it had acquired in 2007. Gapco owns retail outlets in countries like Tanzania, Uganda and Kenya.

Essar Oil had last year acquired a 50 per cent stake in 4 million tons a year Kenya Petroleum Refinery in Mombasa.

The British energy giant BP intends to sell $30 billion of assets — mainly upstream oil and gas fields– over the next 18 months to help pay for the Gulf oil spill clean-up and compensation.

BP owns retail outlets selling gasoline (petrol) and gas oil (diesel) as well as aviation refueling facilities at major airports in Botswana, Tanzania, Namibia, Malawi and Zambia.

The acquisition would give a company a ready market for auto and aviation fuel with scope for further expansion into neighbouring high growth countries, sources said.

In Botswana, BP operates 30 retail sites, mostly in the country’s main cities of Gaborone and Francistown and supplies fuel to the booming mining industry. Air BP in Botswana sells aviation fuel at Sir Seretse Khama Airport in Gaborone and Maun airport, on the edge of the famous Okavango Delta.

Besides selling fuel, lubricants and liquefied petroleum gas (LPG), BP is the largest aviation fuel supplier in Tanzania with about 92 per cent market share.

BP owns half of BP Malawi, which operates 46 service stations. Press Corp has the remaining 50 per cent. It is the sole supplier of aviation fuels and aviation lubricants to the nation’s two international airports at Lilongwe and Blantyre.

BP Namibia’s network includes 29 service stations, five depots and aviation services.

In Zambia, BP owns 53 out of the 196 pumps and a largest number of fuel storage and handling depots in the country. It sells aviation fuels at Lusaka International Airport and also Ndola, Livingstone and Mfuwe airfields.

Reliance Natural ( RNRL ) , Reliance Power merger news is hot now.

Reliance group firms have been constantly merging and demerging business.

Reliance Natural , Reliance communications were demerged from Reliance Industries. Reliance power was carved out of Reliance infrastructure. Now RNRL and Rel Power are merging this time.

Both the scrips were trading 4-5% higher. But suddenly at the end of the day , RNRL crashed 7% from peak.

There is no confirmation about any merger news stuff. This is just a market rumour.

A spokeswoman for Anil Dhirubhai Ambani Group declined to comment when contacted by Reuters

Reliance Digicom is the new baby from ADAG.

It comes from acquisition of Digicable. By this Reliance Digicom will be India’s largest cable network provider.

Merger:

The merged entity, Reliance DigiCom, is expected to cater to the 4-screen strategy of RCom — that is to own mobile, cinema, TV and computer screens.

About Reliance Digicom:

Reliance DigiCom will be an integration of RCom’s direct-to-home (DTH), internet protocol TV (IPTV) and retail broadband operations along with Digicable.

Reliance Communication entered into an all-stock deal with Digicable, though financial details were not divulged. Banking sources put the value of the merged entity at around $1 billion.

Reliance DigiCom will start with a combined subscriber base of 11 million homes, and is targeting a nationwide rollout of digital TV and broadband.

ANIL AMBANI’s Speech:

Anil Ambani said in a statement, “RCom led the telecom revolution in India by growing its subscriber base to over 100 million customers in a short span of just five years. The digital TV and broadband space is poised for similar explosive growth in the years ahead.”

He added that with this game-changing move, “we hope to lead the next revolution in digital home entertainment in India, by offering a world class TV experience and ultra high speed broadband capability to a billion people.”

RIL oil discovery in Cambay basin

Reliance Industries Limited (RIL) has made its seventh oil discovery in exploration block CB-ONN-2003/1 (CB 10 A&B) in Cambay Basin, Ahmedabad, Gujarat.

The block was awarded to RIL under the NELP-V. RIL had earlier this month, made the sixth oil discovery in the basin.

“The discovery is significant, as it is expected to open more oil pool areas leading to better hydrocarbon potential within the block. RIL, as operator, holds 100 per cent participating interest in the block and is continuing further exploratory drilling efforts,” RIL said in a press statement.

The block covers an area of 635-sq km in two parts, Part A and Part B. Of the 17 exploratory wells drilled in the block by RIL so far, 13 are located in Part A and the remaining 4 in Part B of the block.

“This discovery, named Dhirubhai–50, the seventh oil discovery in the block so far, has been notified to the Government of India and to the Director General, Directorate General of Hydrocarbons. The potential commercial interest of the discovery is being ascertained through more data gathering and analysis,” RIL added in the statement.

RIL and RNRL today signed gas supply agreement

Reliance Globalcom is planning to sell stake in this venture.

About Reliance Global com :

Reliance Globalcom operates the undersea cable business.

Plans:

Reliance Communications would begin the process of inviting bids for the stake in Reliance Globalcom only after it concludes the demerger of Reliance Infratel.

Morocco bank Order:

Reliance Communication’s global subsidiary Reliance Globalcom is in the final stages of signing a fiveyear deal with Morocco’s largest bank, Attijariwafa Bank, for managing the lender’s services, according to officials close to the deal. Estimated at Rs 250 crore annually , RCOM will review and service the entire international network of Africa’s third largest bank to help it expand into new locations. The bank has more than 850 branches in Africa.

The deal with RCOM is part of Attijariwafa Bank’s expansion into Europe and the Middle East regions. RCOM is set to provide support for the bank’s expansion into France, Germany, UK, Italy, Spain, Morocco, UAE and Saudi Arabia.

‘‘ The deal with the African bank will maximise network performance while ensuring the reliability of business-critical services for the bank. Connectivity between the remote sites and central data centre will be delivered via ethernet,’’ the official said.

Reliance Broadcast Network starting TV channels with CBS JV

RReliance Broadcast Network Ltd will form an equal joint venture with US media conglomerate CBS Corp to own and operate TV channels.

Reliance Broadcast Networks, previously known as Reliance Media World Ltd, will form a 50:50 joint venture with CBS Studios International, a wholly owned subsidiary of CBS Corp, “for the purpose of owing and/or operating a portfolio of television channels,” the company informed the stock exchanges.

With Reliance Broadcast Networks’s multi-media presence and integrated sales offerings, combined with the content muscle of CBS Corp, BIG CBS stands to bite into a sizable slice of India’s burgeoning television industry.

“As currently proposed, the joint venture would include certain programming rights across the countries of India, Nepal, Bhutan, Sri Lanka, Bangladesh, the Maldives and Pakistan for now,” it said in a June 19 letter to the Bombay Stock Exchange and National Stock Exchange of India.

Reliance Broadcast Networks and CBS will have equal 50 per cent equity interest in the joint venture.

The joint venture will initially broadcast English language general entertainment channels and will explore Hindi and regional language general entertainment channels in the next phase.

“Reliance Broadcast Networks and CBS have today (June 19) signed a preliminary, non-binding term sheet, which is subject to, among other things, customary diligence, the negotiation and execution of definitive documentation, etc., which are presently underway and which the parties intend to endeavour in good faith to complete within a period of one month,” Reliance Broadcast Networks said.

Reliance Broadcast Networks operates India’s largest radio network (92.7 BIG FM) and is into outdoor, promotions and events. CBS Corp’s television network is America’s No. 1 broadcast network. CBS has developed some of America’s biggest hit shows like CSI, NSIC, America’s Next Top Model and The Oprah Winfrey Show.

“The joint venture company would be a limited liability company incorporated in India,” Reliance Broadcast Networks said. “As currently proposed, CBS and Reliance Broadcast Networks, or subsidiaries of such companies, would act as shareholders and shall have an equal 50 per cent equity interest in the joint venture company.”

Reliance Communication planning to sell tower and fibre optic biz to RIL

The country’s second-biggest mobile operator Reliance Communications is said to be in advanced talks with Reliance Industries to sell its fibre optic cables and telecom tower businesses, according to people close to the deal. RCOM is also set to provide infrastructure and back-end support to Mukesh Ambani’s re-dialled telecom plans, sources said.

Anil Ambani-controlled RCOM has decided to offload its stake in its tower company, Reliance Infratel, by hiving it off into a separate entity. “While the proceeds will be used to clear debts, the RCOM board has approved the proposal to restructure the ownership of its tower arm and make it an independent tower company,” said an official in the know, requesting anonymity. RCOM was earlier in talks with other suitors to sell its tower business.

On his part, Mukesh Ambani has announced plans to usher in the next level of growth through broadband. RIL has an immediate need for 15,000 towers for its broadband venture, with its Rs 4,800 crore Infotel buy. It might decide to therefore “lease RCOM’s infrastructure towers,” the official added.

RCOM has more than 50,000 telecom towers in its portfolio and around 190,000 km of fibre optic cable distributed across 44 cities in the country. Earlier on two occasions, Reliance Infratel had tried to launch an IPO to raise funds, but adverse market conditions had forced it to call off the plan.

RIL has been eyeing the lucrative data market more than that of voice, which RCOM has cornered with its CDMA and GSM capability. With data growing at around 70% per year, easy access and leasing out options to corner fibre optic capability are crucial for RIL, sources said.

When contacted, both RIL and RCOM spokespersons declined comment. An RIL spokesperson termed it market speculation.

An analyst with a foreign brokerage tracking the company said RIL “could look at a lease-model type of operation and not a buy-model for the tower business of RCOM.”

The demand for telecom infrastructure is set to increase in the coming months with new players entering the 2G space, apart from 3G auction winners.

Immediately after the Ambani patch-up, the teleco\m industry was rife with rumours that RIL would either go for HCFL or Aircel to get back into the telecom arena. With RIL’s Infotel buy, competition is set to heat up in the coming months, with telecom players gearing up for another tariff war, especially in the broadband, enterprise segment.

Reliance Communications has announced plans to offer unlimited internet access in mobile phone for Rs.99 per month.

The offering is part of the company’s plans to launch third-generation (3G) services in India, Reliance Communications, controlled by billionaire Anil Ambani, said in a statement. The company had won key licences to offer 3G services in several regions across India, including Delhi and Mumbai, the biggest markets in the country, at the end of a government auction in May.

Stake sale:

Last week, debt-laden Reliance Communications unveiled plans to sell up to a 26 percent stake in itself, after India sold licences for 3G wireless services at a price far higher than expected.

Tower Arm demerger:

On Monday, the company said its board approved a proposal to bring investors into its tower arm and help create an independent tower company.

Reliance BIG TV DTH launches Special in-shop campaign High Definition cum Advanced Digital Video Recording Box

Reliance BIG TV (RBTV) the leading Direct-to-Home (DTH) service provider in the country has launched a special in-shop campaign for India’s first High-Definition cum Advanced Digital Video Recording Box.

This special campaign will target retail outlets across 100 cities and will be supported by Reliance BIG TV’s distribution infrastructure which is the largest in India. Reliance BIG TV’s Home Entertainment Service distribution network covers 6,500 towns with a network reach of 1,00,000 retail points that includes electronic showrooms, TV showrooms and multi- brand outlets.

This 360 degree launch campaign will work closely with the channel partners thereby ensuring that there is a clear focus on the retail environment and delivering smart merchandising and providing product demonstration solutions.

Reliance BIG TV has worked towards customizing various merchandising solutions to judiciously utilize its retail spaces. Demonstration units, array of merchandising aids & trained in- shop promoters have been deployed to communicate the features & benefits of India’s first High- Definition Advanced Digital Video Recording Box.

Emphasizing on the potential of the retail medium Umesh Rao, Senior Vice President, Reliance BIG TV said, and “In the DTH space, the last mile consumer engagement assumes critical importance as the category is still in a development stage. Cogent product demonstrations & channel assistance helps consumers take well informed purchase decisions.”

Reliance Infratel and GTL may be merged according to details emerging.

Anil Ambani-controlled Reliance Infratel has all but approved a complicated merger deal that could see its tower assets combine with smaller rival GTL Infrastucture in exchange for Rs 15,000 crore in cash and a significant stake in a new entity for shareholders of its parent company.

The proposed deal, which is yet to be signed, values Reliance Communications’ (RCOM) tower assets at around Rs 30,000 crore and GTL Infrastructure at just short of Rs 15,000 crore, according to a person familiar with the discussions at a recently-held board meeting.

RCOM, which owns 95% of its tower subsidiary, will get Rs 15,000-crore cash and its shareholders will get a 50% stake in the new combine entity, should the deal go through. RCOM will not hold any shares in the combined entity to preserve the company’s vendor neutrality or its independence from telecom operators, the person said.

Anil Ambani, who owns 67% of RCOM, will keep 26% of the combined entity while GTL Infrastructure promoter Manoj Tirodkar is expected to control 30%. The other shareholders of RCOM will receive 24% in the new tower company created by the transaction while the rest will be held by GTL Infrastructure shareholders.

Reliance Infratel is the telecom infrastructure arm of Reliance Communications comprising optic fibre and tower infrastructure. The towers will be moved into a special purpose vehicle that will be sold while the optic fibre network will be retained by RCOM, according to the person quoted earlier who has seen a presentation on the deal structure that was approved by the board of Infratel. Both the companies declined to comment on the matter. A senior Anil Dhirubhai Ambani Group official, however, denied that GTL Infra was best placed to acquire Infratel.

On Monday, RCOM had told exchanges that its board had approved restructuring of Reliance Infratel “to facilitate creation of the world’s largest independent telecom infrastructure company, not owned or controlled by any telecom operator”.

ET had reported that a number of potential strategic investors, including GTL Infrastructure, could buy the tower assets. But the person quoted earlier said a transaction with GTL Infra was the likeliest. Bankers had worked on a detailed deal structure intended to ensure that the company was independent of telecom operators.

The board of Reliance Infratel had met a week earlier to discuss the deal structure. On Monday, the boards of both RCOM and Infratel met again to give in-principle approval for the tower company’s restructuring. RCOM had also said on Monday that an announcement will be made shortly.

“Reliance Communications needs money,” said Kamlesh Bhatia, principal analyst, Gartner. “Any asset that is market worth and easy to liquidate will be an early target,” he said. The towers are currently most easily bankable.

Reliance Infratel has around 50,000 towers, with 1.9 tenants per tower, according to the documents presented to the subsidiary’s board, said the person who had seen the minutes of the meeting.

Looks like soon Reliance Infratel will be demerged from Reliance communications.

Stock has already reacted and its up more than 20%  this month. With reports coming in that Mukesh led Infotel Enterprises using Reliance infratel to launch Broadband Wireless service.

Experts are predicting valuation of Reliance infratel to be in the region of Rs. 35,000 crores.  Gains could be much higher for investors if restructuring of RCOM goes as expected.

Many companies have already lined up for buying Reliance Infratel.

A consortium of PE firm Blackstone and US-based tower company Crown Castle International, Manoj Tirodkar owned GTL, and the world’s largest independent tower company, American Towers, are in talks with Anil Ambani’s Reliance Communications (RCOM) for acquiring its tower unit through a demerger, said a person with direct knowledge of the development.

On Monday, India’s second-biggest mobile operator said its board had approved a proposal to restructure the ownership of its tower arm, Reliance Infratel, and make it an independent tower company that is not owned nor controlled by any telecom operator.

RCOM said the ownership restructuring would be through “demerger and/or other suitable value-creating options”, while adding that it was in “advanced stage of discussions with several domestic and international strategic and financial players” for the proposal, which would be announced shortly.

The acquisition will be done through a combination of cash and stock and it will reduce RCOM’s consolidated debt by 50%, or Rs 15,000 crore, said a person familiar with the development.

Post-acquisition, RCOM’s shareholding in the demerged unit will fall to zero and the shares in the unit will be held by RCOM shareholders. RCOM will not be involved in running the tower company after the transaction and ownership will pass into the hands of a strategic investor, said the person quoted above.

RCOM chairman Anil Ambani said in a statement, “I am personally looking forward to an era of healthy co-operation and collaboration with existing and new players, especially recent winners of 3G and BWA spectrum. I am delighted that this endeavour will greatly benefit RCOM through substantial debt reduction, and enhanced financial flexibility.”

The change in ownership would make it easier for RIL and other winners of the 3G and broadband wireless auction to use the tower company’s infrastructure and fibre.

“RIL would want a speedy and national rollout for its broadband wireless operations. It would make more sense for RIL to use the facilities of an independent tower company for its rollout,’’ said the person familiar with the situation.

In an interaction with analysts on Saturday, senior RIL officials had said they were open to infrastructure-sharing pacts with other companies, including Reliance Infratel. RIL last week acquired Infotel Broadband, the only company to bag pan-India airwaves in broadband wireless auctions that concluded on Friday.

The RCOM board earlier this month approved selling up to 26% stake in the company. Reliance Communications has about Rs 30,000-crore debt on its books and about half of this is linked to its tower arm.

Reliance Infratel, in its draft red herring prospectus filed last September, had said it had a debt of around Rs 15,000 crore. This tower arm’s IPO was initially slated to hit the market in early 2008, but has been deferred since then. In a recent presentation to investors, the company said it had about 54,000 towers as of March 31.

During the telecom boom in 2007, Reliance Infratel raised Rs 1,400 crore by selling a 5% stake to seven investors—George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital. The company was valued at about Rs 28,000 crore.

Infratel is also the second-largest telecom infrastructure firm in India after Indus Towers, which has about 13,000 units and is a three-way JV between Bharti Airtel, Vodafone Essar and Idea Cellular. GTL and Bharti Infratel (Airtel’s independent tower arm) both have about 33,000 units each while Quippo has over 38,000 towers. GTL and Quippo have said they would increase their towers to 50,000 and 60,000, respectively, within the next two years.

For Crown Castle, this will mark its third attempt to enter the Indian market. America’s largest stand-alone tower firm had earlier tried to enter this segment here by buying a stake in Tata Tele’s tower business, which was eventually merged with SREI group company Quippo.

It had also put in a bid to buy Aircel’s towers but lost out to GTL. Crown Castle, which has operations in the US, Australia and Puerto Rico and is scouting for acquisitions in emerging markets, had earlier also explored the possibility of acquiring 26% in Reliance Infratel.

American Towers, on the other hand, has already made three acquisitions in India. In February, it had acquired 4,450 towers of Essar Telecom Infrastructure (ETIPL) for an enterprise valuation of about Rs 2,000 crore.

Prior to that in February ‘09, it announced the purchase of Xcel Telecom’s 1,700 towers followed by the acquisition of Transcend Infrastructure in October. ATC currently has about 8,000 towers in India.

American Towers India CEO Amit Sharma declined to comment when asked if the company was in the race to buy majority stake in Infratel while the GTL spokesperson said the ‘company would not comment on speculation’.

RNRL is up 10% today on hopes of a Gas deal from RIL.

In May, India’s top court had ordered Reliance Industries, controlled by billionaire Mukesh Ambani, and Reliance Natural that is run by his younger brother Anil, to renegotiate a gas supply pact within six weeks.

The brothers had since taken a step towards reconciliation in their long-running feud, ending non-compete agreements in a move they hoped would lead to cooperation between the two groups.

Gradatim IT Ventures has got Reliance ventures on its boat. Reliance ventures is expected to invest close to 7-8 million USD .

About Gradatim :

Gradatim is a solutions provider to micro-finance institutions, non-banking financial companies and insurers.