Telecom Inventory

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Reliance Communications, an Indian broadband and telecommunications company based in India, faces new set-backs with Flag Telecom, one of its acquisitions, cancelling its $1B initial public offering. The parent company has been looking to drastically reduce its $7 billion debt and the IPO was seen as a quick remedy. Flag Telecom is one of the largest international network operators connecting the US with Asia, the Middle East and Europe.

The IPO-cancellation is a sign of a weak global economic environment which has seen mixed results from Facebook’s own series of misfortunes, to the more surprising good first-day results of other technology companies.

Flag Company was purchased as an asset by Reliance in 2007, at a time when many US-based telecom companies were faltering. The telecoms in the emerging Indian economy quickly bought the assets of the failing operators, including those providing ethernet services (Yipes) with the hopes of expanding the South Asian businesses globally.

Internal turmoil in the family-owned and run Reliance is seen as the precursor of the company’s falling to debts. The Ambani brother’s professional and personal disagreements divided the company, with Mukesh Ambani taking the energy assets which he has used to expand to telecom and retail, thanks no doubt to the great energy demand in India; while Anil Ambani got hold of the communications sector which has faced tremendous competition from rising telecom-companies in their nation. 

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