RCom Says Strategic Transformation Enters Final Stage, MTS Deal to Be Completed by June

Reliance Communications (RCom) said that its strategic company transformation has now entered final stages of the competition with proposed acquisition of Sistema Shyam TeleServices wireless. The proposed purchase of SSTL’s wireless operations has received all approvals and is expected to be completed in June 2017.

RCom said that the SSTL merger will add highly valuable 30 MHz of 850 band spectrum in 8 key circles, and will extend the validity of spectrum in these circles for an additional period of 12 years, till 2033.

Rcom

RCom had launched a comprehensive programme of all-round strategic transformation in the year 2015, with emphasis on industry consolidation, an asset-light business model, future sustainability, and cost efficiencies.

As part of the program, RCom had inked spectrum sharing and trading deal with Reliance Jio for 850 Mhz spectrum. The arrangements with Jio have been fully implemented, and are now operational for the past over six months. The company said that the agreement had enabled RCom to deliver access and connectivity to a nationwide 4G LTE network to millions of valued customers, with minimal CAPEX and considerably lower operating costs.

Under its transformation drive, RCom is also merging its wireless business with Aircel: The proposed consolidation of RCom’s wireless business with Aircel will place the combined wireless entity among the top 3 ranking operators in 12 important circles, and among the major four operators in India by customer base and revenues.

The combined RCom-Aircel entity will enjoy substantial benefits of scale, and CAPEX and OPEX synergies with an estimated NPV of Rs. 20,000 crore. As part of this transaction, RCom’s overall debt will reduce by Rs 14,000 crore, together with the transfer of liability for spectrum instalments of an additional approx. Rs. 6,000 crore.

“We have received approvals from the Stock Exchanges, Securities and Exchange Board of India’s (SEBI) and Competition Commission of India (CCI). The demerger and merger Scheme has been filed in the National Company Law Tribunal (NCLT). Approvals from the shareholders of both RCOM and Aircel have been duly received in the NCLT convened meeting during April 2017. The lenders’ and other requisite consents are expected to be received in the next few months,” RCom said in a statement.

RCom is also selling its tower infrastructure to Brookfield. The proposed deal has received requisite approvals from CCI. The business demerger and transfer scheme have been filed with the NCLT. Shareholders’ approvals have been received in the NCLT convened meeting during April 2017, and lenders’ and other consents are expected in the next few months.

As part of this tower deal, RCom will receive an upfront cash payment of Rs. 11,000 crore from the proposed transaction and the same will be fully utilised for reduction of debt. Rcom will also receive 49% future economic upside in the Towers business.

Upon completion of the Aircel merger and sale of the Tower business, RCom’s debt will stand reduced by around Rs 25,000 crore.

Upon completion, the Company will hold highly valuable stakes of 50% in the Aircel JV and 49% economic upside in the towers business, providing future monetization opportunities for significant further deleveraging.

“RCOM will also continue to own and operate its existing high growth and higher margin businesses in the domestic enterprise segment, Data Centers, optical fibre and international business in GCX,” the company said.

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38 Comments on "RCom Says Strategic Transformation Enters Final Stage, MTS Deal to Be Completed by June"

 

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Siva
May 30, 2017 3:41 pm 3:41 PM
Integration of 800Mhz Spectrum from MTS to RCOM 850Mhz will Start from July 2017 Current RCOM 4G (2G/3G Own RCOM GSM, 4G ICR by Jio Data Only) will be removed and Mostly After August 2017 All RCOM 4G Subscribers (2G/3G GSM, 4G Data Only) and MTS CDMA Subscribers will be Transferred to New Reliance LTE Network (VoLTE, eMBMS [LTE Broadcast], IMS) Supported by LTE 850Mhz (Band 5) By December 2017 or March 2018 Reliance LTE and Jio LTE Services will be Equalized Final Output on Main Stream: Reliance LTE (VoLTE, eMBMS [LTE Broadcast], IMS) Supported by LTE 850Mhz, ICR 1800Mhz,… Read more »
Kunal
May 31, 2017 1:54 pm 1:54 PM
Aircel- rcom 2g spectrum (1800) mhz- total holdings may not be liberalized for 4g…..they may continue with 2g where ever only few years are left for spectrum expiry & there is extra overlapping of spectrum in few circles…..3g will continue in 2100 mhz as usual. Volte will bring down the voice cost but running three parallel networks will also increase cost. As per my opinion – Rcom should be bold enough ….they should provide only volte network as they are starting volte. Their coverage & quality will improve drastically. Even 3g spectrum which is free should be transferred for 4g… Read more »
Kaushik
May 31, 2017 10:04 am 10:04 AM

Is this SIM reader update available right now? Or do we need to wait till August / December? What about aircel spectrum? When will that be harmonised with RCom?

siva
May 31, 2017 10:59 pm 10:59 PM

Sim Reader Update in May 2016 was to interlink Jio ICR 4G to avail Reliance 4G.
May 2016 to till Reliance LTE Launch all Reliance 4G is working on Jio ICR 4G.
Sim Reader Update in 2017 at the Time of Reliance LTE Launch only Available to Delink Jio ICR 4G and Link Own Reliance LTE Supported by 850Mhz

Kaushik
June 1, 2017 8:17 am 8:17 AM

So this will start after August?

Nikhil
May 31, 2017 9:32 am 9:32 AM

There won’t be Reliance 2G and 3G network you mean to say in 2018?

Kaushik
May 31, 2017 4:36 pm 4:36 PM

Those will continue till 2020 at least, don’t worry. VOLTE is due to be launched within 2-3 quarters (6-9 months).

Aqib
May 30, 2017 1:57 am 1:57 AM

Jio is falsely promising to install a site at Jamalpur, Bhojpur, Bihar, 802163.
No network coverage around 20 km.

CRAZY
May 30, 2017 9:21 am 9:21 AM
@Aqib : Jio is rapidly deploying thier towers in bhojpur district but it will take time to go live as customer care said. They have already installed many towers.May be same is happening in your location. You can also check it by yourself on tarang sanchar website but intrestingly so many bsnl towers are not updated in this website & jio is installing equipments on bsnl towers too. You can also call customer care & ask them about it be careful as the location traced by jio care is highly inaccurate so its better to inform them your location manually… Read more »
Rinu
May 30, 2017 8:57 pm 8:57 PM

They are neither able to trace our location automatically or manually. Why do they keep the information private? Let them open it up. We will find it on our own.

aakash
May 29, 2017 2:02 pm 2:02 PM

jio deploy band 3-1800mhz in my city up west but no lte advance band 5 speed is 25mbps band 3 speed 18mbps band 40 speed is 65-70mbps as i m live in near tower around 150meter

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