RCom says Aircel merger to be completed by 2017 middle, MTS merger by March

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Reliance Communication's (RCom) merger with smaller GSM telco Aircel, and tower deal with Brookfield are likely to be completed by the middle of 2017, while the merger with Sistema Shyam Teleservices, which operates under MTS India, will be completed by March end this year, the telco said in analyst call post results on Monday.


The Anil Ambani-led telco also clarified that the ongoing legal issue on Aircel and Maxis will not impact the merger process. The telco's head of strategy and regulatory affairs said, “everything is on track”.

The supreme Court had last month threatened to cancel Chennai-based telecom operator Aircel’s spectrum and licences if T Ananda Krishnan, promoter of Malaysia-based Maxis Communications Berhad, and former Maxis director Augustus Ralph Marshall did not appear before a trial court in connection with a case filed by the Central Bureau of Investigation against former telecom minister Dayanidhi Maran. Maxis currently owns 74% of Aircel’s equity.

RCom had entered into a merger deal with unlisted Aircel in September last year in order to merger its wireless business with the latter's wireless operations to create a new entity with assets worth Rs 65,000 crore. The merger will create India's fourth largest telco by customers and revenues. The move is aimed at reducing RCom's overall debt by Rs 20,000, which is nearly 40% of the company's total debt.

The merged entity will have the second-largest spectrum holding among all operators, aggregating 448 MHz across 850, 900, 1800 and 2100 MHz bands.

Gurdeep Singh, Co-CEO, RCOM and CEO, Consumer Business, RCOM today said that consolidation is the only way forward in the industry. "Reliance Communication is playing an upfront running role in the consolidation of the industry," he added.

Late last year, RCom inked a definitive pact to sell 51% of its tower unit, Reliance Infratel to Canada-based Brookfield Group for an all-cash deal of Rs 11,000 crore.

It had also said that telecom towers held by Reliance Infratel will be demerged into Towercom Infrastructure, which will be wholly owned and independently managed by affiliates of Brookfield Infrastructure on completion. The new entity will be the second largest independent and operator-neutral towers company in India after Indus Towers, according to reports.

Also read: RCom reports Q3 net loss of Rs 531 cr, blames competition & shutdown of profitable CDMA biz

RCom last week reported a net loss of Rs 531 crore in the third quarter on account of an unprecedented competitive intensity, complete shutdown of its profitable CDMA operations, and due to an increase in amortisation and interest expense aggregating Rs 278 crore on account of capitalisation of 850 MHz spectrum liberalisation fee.

The telco's revenue declined 4.3% at Rs 4,922 crore in the quarter, against Rs 5,142 crore in Q2.

Reported By

Telecom Analyst

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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