RCOM confirms merger talks with MTS India, 4G service on horizon why it’s a win win for both operators

As we had reported earlier, Reliance Communications has confirmed it is has been involved in exclusive talks to buy MTS India in a stock swap deal. Earlier last month Vladimir Yevtushenkov, who controls MTS parent company Sistema conglomerate held talks with Reliance Communications about a possible joint venture in India.

docomo-vs-reliance

4G service on the horizon

In last February 2015 auction, RCOM surprised everyone by bidding for additional 800MHz spectrum of  1.25 to 2.5 MHz in many circles to bring its total holding to 5MHz on pan India level for 4G deployment. But 4G deployment was not going to be easy for RCOM as major chuck of its 800MHz spectrum still lies unliberalized  and had to pay thousands of cores to get it liberalized. Another problem was its existing CDMA and EVDO subscriber base. Once RCOM go for 4G, there won’t be enough airwaves left to continue its CDMA operations.

Here comes the significant of merger with MTS India as it hold at least 3.75MHz of liberalized 800MHz spectrum in 9 circles. Combined with that the recently bought 1.25 to 2.5 MHz spectrum will make sufficient 5MHz for 4G deployment and still have enough 800Mhz unliberalized spectrum to continue CDMA operations for existing subscribers for both operators.

Win-Win for both operators

The pure-play CDMA operator MTS India strategy was to become a major data player in India. But its decision to stay away from recent auction citing high reserve price has proven lethal as it has left with scarcity of spectrum and operations in only 9 circles. 4G deployment was also impossible for MTS as it was left with only 3.75MHz spectrum in most circles. With the merger, both operator could pool its spectrum to start 4G service on liberalized spectrum while retaining its CDMA service on unliberalized spectrum.

Both companies will go for a stock swap deal which means companies don’t have to spend money on the merger. Once the merger is completed, RCOM and MTS will end up with shareholding in the combined entity. The government is excepted to announce merger and acquisition guidelines shortly. But still the transaction is not likely to go smoothly as in past government regulators had raised concerned about similar mergers of Vodafone-Hutch and Idea-Spice.

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42 Comments on "RCOM confirms merger talks with MTS India, 4G service on horizon why it’s a win win for both operators"

 

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rinkoo
June 17, 2015 2:53 pm 2:53 PM

RELIANCE HAVE PAN INDIA SERVICE AND HAVING CDMA BEST SUPERIOR NETWORK WITH CRYSTAL VOICE
MTS HAVE NINE CIRCLE IN INDIA..
MERGER IS VERY POSITIVE FOR BOTH COMPNYS

sanjit roy
June 17, 2015 2:16 am 2:16 AM
This will be the beginning of consolidation in the Indian telecom industry. I think after m&a guidelines, Tata docomo and Aircel should merge and create a single entity that will be a win win situation for them as well as for customers. For example, after this TD customers of kolkata and rob have access to 3g, also they can reduce opex and able to utilize their infrastructure at optimum levels. However their are lot of customers who are worried about tariff hike, but only market forces will decide this and as far as TD/Aircel is concerned they are both making… Read more »
saket
June 17, 2015 2:31 pm 2:31 PM

Merger means reduction of player and which means reduce competition and ultimately tariff hike.

If TD and aircel merge and become profitable is myth.

Both will merge and increase tariff which will reduce losses.

sanjit roy
June 17, 2015 4:24 pm 4:24 PM

@Saket- Bro merger will also reduce opex, actually most of the funds are wasted in opex. Even they can utilize or shift their surplus infrastructure for new expansions after merger. For example, aircel can shift their equipments (BTS/BSC) form kolkata to rest of bengal for expansions, so merger will not only benefit TD/Aircel at the same time customers will also get the benefits like improvement of network coverage.

Maghsood
June 16, 2015 9:55 pm 9:55 PM
Hello ,in my small city i am getting jio 4g signal since six month.first they installed a dual band(many tech experts saying their antenna is in neutral mode that can use for any service ie 2g,3g or 4g:)antennas.it can operate two frequencies at same time.everyone mentioned it one for 4g in 2300 band&another for 2g/4g in 1800 band(in available circle).They completed installation in most areas&finished trails.So everybody excepted they will launch service in 15th june.But they started installing another dual mode antenna bigger than old one in same direction.using this they can operate another two frequencies,total four frequencies at same… Read more »
Firoz
June 16, 2015 11:50 pm 11:50 PM

In my area also they installed like this…2 set of antennas on each direction…after this now Airtel is installing 4g antennas for their 4g services…

Maghsood
June 17, 2015 8:25 am 8:25 AM

When i checked with my lg g3 at gundlupet(karnataka) airtel 4g signal is there.

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