RCom set to complete Sistema Shyam merger by early November
24 October 2017
Anil Ambani-controlled Reliance Communications (RCom), which had received the Department of Telecommunication's (DoT) approval for the merger of its wireless business with Sistema Shyam Teleservices Limited (SSTL), is likely to close the deal by the first week of November, the company said in a statement.
RCom has assumed the liability to pay Rs390 crore per annum for the next eight years to DoT, which is due for spectrum purchased by SSTL. Under the deal, all wireless business assets of SSTL will come under RCom. However, the brand MTS will continue to operate. SSTL will get 10-per cent stake in RCom.
Following the merger, RCom will acquire about 2 million customers and get additional annual revenues of around Rs700 crore. In addition, it will acquire 30 MHz of the superior 800/850 MHz band spectrum, ideally suited for 4G LTE services, complementing to its nationwide footprint.
This will result in extension of the validity of Rcom's spectrum portfolio in the 800/850 MHz band in eight important Circles - Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal - by a period of 12 years, from 2021 to 2033.
As a result of the demerger, SSTL will receive a 10-per cent equity stake in the fully diluted equity share capital of RCom. In addition, RCom will assume the liability to pay the DoT instalments for SSTL's spectrum, amounting to Rs 390 crore per annum for the next 8 years.
The deal would provide RCom with 3.75 MHz of spectrum in 850 MHZ band in Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, UP (West), Kolkata, West Bengal and Rajasthan. SSTL has spectrum holdings in these circles, except for Rajasthan, valid till the end of financial year 2033.
The completion of this merger will bring the total number of mobile operators in the country to 10. Industry experts expect further consolidation will take the total to three in the near future.