Debt-laden telecom firm Reliance Communications on Tuesday said it had received several offers for its 95-percent stake in its tower arm, a move seen as aimed at soothing investors a day after it reported a plunge in profit.

India's second-largest mobile carrier, controlled by billionaire Anil Ambani, did not name the bidders, but said the board had approved taking the process to the next stage of due diligence. It said it aimed to complete a deal at the earliest.

Saddled with more than $7 billion in net debt and seven straight quarters of profit declines, the firm has so far been unsuccessful in its efforts to raise funds to cut debt.

An agreement to spin off the tower arm Reliance Infratel into a venture with GTL Infrastructure fell apart last year, dealing an unexpected blow to Reliance Comm, while a separate plan announced in last June to sell up to 26 percent in the mobile carrier itself has not yet yielded any takers either.

"I am very skeptical about this. They have been talking about it for such a long time but it is highly unlikely that anything will get done in the near future," said an investment banker at a foreign bank in India.

Reliance Comm does not usually hire banks or advisers for deals, but many in the banking community had not heard of the new offers.

India's mobile sector has been hit by a huge telecom licensing scandal, with fates of dozens of licences hanging in the balance.

A unit of Reliance Comm and three group executives are among those charged by federal police in the corruption scandal, in which operators have been accused of getting licenses out of turn, possibly costing India $39 billion in revenue.

"The overall market sentiment in the telecoms sector is not very conducive for any M&A deal. They won't be able to get the desired valuation from a buyer if they want to do a deal now," the banker, who declined to be named, said.

Reliance Comm said a deal for the tower unit would help it achieve "substantial reduction" in debt.

"This is on expected lines. Everybody knows that the business in on the block. But the question is: 'When will a deal be consummated?'" said Ambareesh Baliga, chief operating officer at Way2wealth Securities.

Shares in Reliance Communications fell as much as 2.2 percent in early trade before paring some losses, after the company posted a bigger-than-expected 86-percent drop in fourth quarter profit on Monday.

Reliance Comm shares have fallen more than 40 percent this year, to be the worst-performer among benchmark index components. The main index is down just over 10 percent.

A senior Reliance Comm executive told analysts on a conference call on Monday that "strategic initiatives" were under way to reduce the company's debt, without elaborating.

Chairman Ambani told shareholders last September that they were in talks with strategic and financial investors to "unlock value" in the tower unit and that a transaction structure would include a combination of cash and stock.

Reliance Comm had earlier planned to sell 10 percent of Reliance Infratel through an initial public offering, but did not go ahead with it because of unfavourable market conditions.

Media reports in the past have linked U.S.-based tower firms American Tower and Crown Castle among the suitors for Reliance Comm's tower unit.

Analysts have also said Reliance Industries, controlled by Anil Ambani's elder brother Mukesh, could also be a likely suitor for Reliance Comm's tower unit, which has about 50,000 telecom towers.

Reliance Industries last year bought Infotel Broadband, which emerged as the only firm to secure nationwide wireless broadband radio airwaves.


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