New Delhi/Mumbai: Reliance Communications, India`s No. 2 mobile operator, is in preliminary talks to buy Kuwaiti telecoms firm Zain`s African operations, two banking sources with knowledge of the development said, in a deal reported to be worth USD 10 billion.
The Kuwaiti firm said last month it was reviewing a possible sale of its African operations -- minus Morocco and Sudan -- after French media and telecoms giant Vivendi called off talks to buy a majority stake in the African business.
Zain Chief Executive told Kuwait daily newspaper Al-Rai that the firm was in talks with three major telecoms firms, including one from India, to sell all or part of its African operations.
Reliance Communications and its larger rival Bharti Airtel last year talked to South Africa`s MTN separately for a possible combination, but both failed to seal a deal.
"Reliance Communications has been looking at some emerging market assets since its deal with MTN fell through," said one banking source with knowledge of the talks.
"They are in preliminary stages of evaluating the deal," he said on Tuesday, and added that Reliance Communications was yet to appoint merchant bankers.
Another source also said the talks were underway.
A spokesman for Reliance Communications was not immediately available for comment.
Shares in Reliance Communications, which the market values at about USD 10 billion, were down 0.6 percent at 244.10 rupees by 0428 GMT after seesawing in a Mumbai market up 0.2 percent.
Analysts say Africa being the last of less-penetrated markets in terms of mobile growth presents a big opportunity for global mobile firms, who are seeing cut-rate competition in saturated markets and are facing falling call tariffs.
Bharti and MTN revived merger negotiations in May this year and are in exclusive talks till August 31. The deal, which Bharti has said is worth more than USD 23 billion both ways, would aim at a full merger of the firms and create the world`s third-biggest telecoms firm with more than 200 million subscribers.
Reliance Communications already owns Uganda`s Anupam Global Soft.
The Times of India newspaper said Zain`s African operations were valued at USD 10 billion.
Zain, which is in the midst of a strategic review and is being advised by investment bank UBS, plans an extraordinary general meeting on August 31 when shareholders will be asked to vote on amending its ownership restrictions.
The move would pave the way for selling a large stake in the firm.
United Arab Emirates-based Etisalat has said it was interested in taking a majority stake in Zain, according to the head of its international unit.