Reliance Communications’ board will meet on November 2 to discuss the potential merger with Sistema Shyam Teleservices (SSTL), which operates under the MTS brand in the country, the company said in a notice to the stock exchanges Saturday. The company’s board will consider a scheme of arrangement for demerger of telecom business undertaking of Sistema Shyam Teleservices Limited into the company.
The Anil-Ambani-owned company was in talks with MTS India for a possible takeover of the latter’s telecom business in an all-stock deal. As per media reports, RCom was discussing the deal to acquire SSTL’s telecom business and not its liabilities.
Sistema JSFC holds nearly 57% in MTS India, while the Russian government possesses more than 17%. Shyam Group, the Indian promoters of SSTL, holds 24%, while minority shareholders own the rest.
In 2008, Sistema in a joint venture with Shyam Group got licences and spectrum to offer telecom services in all of India's 22 circles using CDMA technology. Sistema gradually raised its stake in the joint venture.
In February 2012, the Supreme Court cancelled all but one of MTS India's licences, along with those of many of other telcos. MTS has since bought back airwaves in eight circles, and is now the only pure-play CDMA operator, offering broadband focused telecom services in nine of India's 22 service areas to more than nine million subscribers.
RCOM, India's fourth-largest carrier, is a pan-India operator offering both CDMA and GSM services and has more than 110 million users. RCOM bought spectrum in the 850 Mhz band in this year’s auctions, and now expects to launch 4G services on these airwaves by the end of 2015. With the takeover of MTS India’s telecom operations, RCOM is looking to further strengthen its bid in the country’s 4G market, which is likely to see fierce competition starting next year.
Bharti Airtel has already taken a lead in the 4G space by launching services across over 300 towns, and is expanding further ahead of the commercial launch of Reliance Jio, which is expected to happen in the first quarter of next financial year. Vodafone and Idea Cellular are too readying to enter the 4G market soon.