Reliance Info joins the race for Hughes Software

By siliconindia   |   Saturday, 24 April 2004, 07:00 Hrs
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MUMBAI: Reliance Infocomm has bid to acquire News Corp’s stake in Hughes Software (HSS), a move which represents an attempt by the new economy vehicle of the fabrics-to-oil Reliance group to have a presence in all segments of the telecom sector, a source close to the deal said, reports Economic Times.

The Mumbai-based Reliance Infocomm, which has emerged as the country¬ís largest wireless service provider in about a year, is interested in the Rupert Murdoch group company for its expertise in telecom software development. ¬ďThey want to be dominant across the telecom sector,¬Ē the source added.

Sources said Hughes’ ability to develop software for mobile phones, 3G and broadband services has attracted Reliance. Reliance Info is the country’s largest wireless operator, selling CDMA technology-based services to more than 6m subscribers. It also offers national long-distance, international long-distance and is rolling out a nationwide broadband service for homes and corporates.

Hughes Software is one of the largest telecom software companies in India, developing software for mobile phone communications.

It also provides outsourcing services and billing network management services. Last year, it bought Bangalore-based Tenet Technologies, which provides internet protocol and 3G software services.

Hughes Software shares rose about 6.5% to Rs 537.85 on Friday, while the main sensex ended flat. Hughes shares have risen by 6.3% over the week, but have fallen by 4.8% over the month.

A Reliance Infocomm spokesperson told ET that the information is speculative. But sources close to the deal added that Reliance is among the bidders who have expressed interest in News Corp’s 55% stake. Others in the fray are private equity funds, Warburg Pincus, General Atlantic Partners and Singapore-based Temasek Holdings in collaboration with an Indian partner. The current management of HSS is also believed to have submitted a bid.

The Rupert Murdoch-controlled giant acquired HSS when it bought Hughes Electronics from General Motors. The purchase was largely to gain control of DIRECTV, a satellite television broadcaster, providing digital television entertainment to US homes.

Sources said the due diligence of HSS operations and financials is currently on. A final price bid will be called over the next few weeks.

News Corp and its advisors are believed to be quoting a price of about five times net sales, which would be close to $440-500m. Some of the bidders, sources said, may find the price too high.

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