RCom, Aircel promoters ink 50:50 merger deal

By September 14th, 2016 AT 7:09 PM

Anil Ambani led Reliance Communications (RCom) and promoters of Aircel, Maxis Communications Berhad (MCB), have inked a definitive deal for the merger of their Indian wireless businesses. The merger will be the largest-ever consolidation in the Indian telecom sector.

mobile-tower-india

The combined entity will create a strong operator clearly ranked amongst India’s top 4 telcos by customer base and revenues, also ranking amongst the top 3 operators by revenues in 12 important circles, RCom said.

The combined entity will enjoy substantial benefits of scale driving significant revenue growth, and capex and opex synergies with an NPV of Rs. 20,000 crore ($3 billion).

RCom and MCB will each hold a 50% stake in the merged entity, with equal representation on the Board of Directors and all Committees. The Company will be managed by an independent professional team under the supervision of the Board.

The combined company will be one of India’s largest private sector companies, with an asset base of over Rs. 65,000 crore ($9.7 billion) and net worth of Rs. 35,000 crore ($5.2 billion).

The merged entity will have the second-largest spectrum holding amongst all operators, aggregating 448 MHz across the 850, 900, 1800 and 2100 MHz bands, and will enjoy enhanced business continuity through extended validity of spectrum holdings till 2033-35.

RCom’s overall debt will reduce by Rs 20,000 crore ($3 billion) or over 40% of its total debt, and Aircel’s debt will reduce by Rs. 4,000 crore (USD 600 million), upon completion of the transaction in 2017, subject to applicable approvals.

“Together with our partners, MCB, we are delighted to have taken the lead in consolidation of the Indian telecom sector, first, with RCOM’s acquisition of the wireless business of SSTL (Sistema / MTS), and now, with the combination of our business with Aircel Ltd. in a 50:50 Joint Venture with MCB. We expect this combination to create substantial long term value for shareholders of both, RCOM and MCB, given the benefits of the wide-ranging spectrum portfolio and significant revenue and cost synergies,” Anil D. Ambani, Chairman, Reliance Group, said

“This deal further reinforces MCB’s commitment to India. Since acquiring Aircel in 2006, MCB has invested in excess of Rs 35,000 crore ($5.2 billion) into Aircel, making this one of the largest foreign investments into India, not only in the telecom industry but across all sectors. The magnitude of this investment, and the further equity commitment in support of this deal, are underpinned by MCB’s belief in the long term growth potential of both India and the Indian telecom sector,” MCB said in a joint statement.

RCom will continue to own and operate its high growth businesses in the domestic and global enterprise space, Data Centers, optic fibre and related telecom infrastructure, besides owning valuable real estate.

Both RCom and MCB will infuse additional equity into the merged entity to further strengthen the Balance Sheet, fund future growth plans, and enhance financial flexibility. Both parties are already in talks with leading international investors in this regard.

The new merged company’s subscribers will have access to nationwide ‘gold standard’ 4G LTE services on the sub-1 GHz band, under RCOM’s existing nation-wide spectrum sharing / ICR arrangements with Reliance Jio Infocomm.

Read more on:

29
Leave a Reply

avatar
Photo and Image Files
 
 
 
17 Comment threads
12 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
22 Comment authors
Kaushik NatarajanVenuKaushikKaushikakhil Recent comment authors
newest oldest most voted
Venu
Venu

i see frequently some messages like -when switched to Reliance Jio – after 3 months IMEI of mobile . allow only Reliance SIM . is it a false news ?

Kaushik
Kaushik

I have to port out of aircel. This rcom looter I dont want to be part of!

Recent Posts

Bharti Airtel Makes the Run to Second Spot With Rising Revenue Market Share

Bharti Airtel might now be brimming to make its climb back to the top leagues of the telecom industry by...

You Broadband Starts Providing Unlimited Data Plans With 100 Mbps Starting at Rs 944

Before the commercial launch of Reliance Jio GigaFiber, the broadband sector is seeing a plethora of new plans from all...

Microsoft to Stop Pushing Updates to Windows 7 Users from January 14, 2020

Microsoft on Wednesday said its Windows 7 operating system would not get security and technical updates from January 14, 2020,...