Reliance Communications receives regulatory approval to acquire Sistema

22 Feb 2016

1

Reliance Communications (RCom) has received clearance from the anti-trust watchdog Competition Commission of India (CCI) for its deal to acquire Russian conglomerate Sistema's Indian arm, Sistema Shyam Teleservices Ltd (SSTL) that operates under the brand name MTS.

"We wish to inform you that the Competition Commission of India (CCI) has approved transfer of telecommunications undertaking of Sistema Shyam Teleservices Ltd to the company," Reliance Communications said in a BSE filing.

Rcom announced the acquisition of Sistema's Indian telecom unit in an all-stock deal to create an operator with 118 million subscribers, in November last year.

As per the deal, SSTL will hold about 10 per cent stake in RCom and pay off its existing debt before closing the deal. RCom will assume the liability to pay the government installments for SSTL's spectrum, amounting to Rs392 crore per annum for the next 10 years.

AFK Sistema controlled by Russian tycoon Vladimir Evtushenkov holds 56.68 per cent stake in SSTL while the Russian government owns 17.14 per cent stake. India's Shyam Group has 23.98 per cent stake and the rest is held by small investors.

SSTL offers mobile telephony services under the MTS brand across nine telecom circles in the country. The deal will give RCom access to spectrum or airwaves in the 850 MHz band that can be used for 4G services, which it plans to start by the year-end.

The acquisition will help extend the validity of Rcom's licence in eight high revenue-generating circles of Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West) and West Bengal by 12 years.

Not only will RCom be able to compete with the existing players but consolidate its position ahead of Mukesh Ambani's foray into the sector with 4G services under the Reliance Jio brand later this year.

The Anil Ambani-led RCom has also initiated talks with the promoters of Aircel - Malaysia's Maxis Communications and Sindya Securities and Investments - for a potential merger.

Once the two deals also go through, RCom-Sistema-Aircel combined will have more than 150 million customers in India, with close to 20 per cent of the total spectrum - highest in the country - in virtually every band currently available to private players.

Besides, RCom had last month announced that it has paid Rs5,383.84 crore to the government as fee towards spectrum sharing and trading in 16 circles for the 800-850 MHz band, following its pact with Jio for nine service areas.

Based on the plan, RCom will pursue spectrum trading in nine circles with Jio and share this scarce airwaves in 17 circles. Eventually the sharing will cover all 22 circles in the 800 MHz band.

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more