Reliance Communications, Aircel merge; create entity of Rs 65,000 crore

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Old 14-Sep-2016
Thumbs up Reliance Communications, Aircel merge; create entity of Rs 65,000 crore

Reliance Communications and Maxis Communications Berhad, promoters of Aircel, have signed definitive documents for merging their Indian wireless businesses, a deal that was in the works for many months and marks major consolidation in the Indian telecom sector.

The merger will reduce RCom's debt by Rs 20,000 crore, which is over 40 per cent of its total debt, and also lower Aircel's debt by Rs 4,000 crore, when it closes next year, RCom said in a statement Wednesday.

Both companies are already in talks with leading international investors to get additional equity infusion into the new entity, post the merger, in order to further strengthen the balance sheet, fund future growth plans, and enhance financial flexibility.

"Together with our partners, Maxis Communications Berhad (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," said Reliance Group chairman Anil Ambani.

"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," the group head added.

"This deal further reinforces MCB's commitment to India, the Malaysian company said. Since acquiring Aircel in 2006, MCB has invested in excess of Rs 35,000 crore into Aircel, making this one of the largest foreign investments into India, not only in the telecom industry but across all sectors, the company added.

The transaction is subject to applicable approvals, including shareholder and regulatory approval, besides lenders' consents.

The RCOM-Aircel combine will be among the top four telcos in India, by customer base and revenue, in which both companies will hold 50 per cent with equal representation on the board and committees.

The new company that would be formed will have the second-largest spectrum holding of 448 MHz across the 850, 900, 1800 and 2100 MHz bands, across all 22 circles, and spectrum will be valid till 2033-35. The merged entity's subscribers will have access to nationwide 4G services on the sub-1 GHz band, under spectrum sharing and roaming arrangements with Reliance Jio Infocomm.

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

Source - The Economic Times

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