In one of the largest ever consolidation deal in Indian telecom sector, the Anil Ambani-led Reliance Communications (RCom) and Aircel will merge their Indian wireless business. This will lead to creating a combined entity with assets worth Rs 65,000 crore.
This merger comes within days after the commercial launch of Reliance Jio, owned by Anil’s brother Mukesh Ambani’s Reliance Industries.
Going through the details of the merger, the RCom and Maxis Communications Berhad (MCB) the promoters of Aircel will have a 50:50 joint venture, with equal representation on the board and committees. The merged entity named “MergedCo” will be one of India’s largest private telecom operator with a net worth of Rs 35,000 crore.
Upon completion of the transaction in 2017, RCom’s overall debt will get reduced by Rs 20,000 crore, that’s 40% of its total debt. Whereas Aircel’s debt will get reduced by Rs 4,000 crore.
The merger will create a strong operator ranked amongst India’s top four telecom operators by customer base and revenues. Also, it will rank amongst the top three telecom operators by revenue in almost 12 major telecom circles.
The merging entity ‘MergedCo’ will have the second-largest spectrum holding among all operators, aggregating 448MHz across 850, 900, 1800, and 2100MHz bands. This spectrum holding will have an extended validity till 2033-35.
“Together with our partners, 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. in a 50:50 Joint Venture with MCB.” said Mr Anil D. Ambani, Chairman, Reliance Group. “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,” he added.
RCOM will continue to own and operate its high growth businesses in the domestic and global enterprise space, Data Centers, optic fibre and related telecom infrastructure, besides owning valuable real estate.
“Tcess of INR 35,000 crore (USD 5.2 billion) into Aircel, making this one of the largest foreign investments into India, not only in the telecom industry but across all sectors,” said MCB.his deal further reinforces MCB’s commitment to India. Since acquiring Aircel in 2006, MCB has invested in ex
Highlights of RCom & Aircel Merger
- Largest ever consolidation in Indian telecom sector.
- RCom and MCB will be 50:50 partners in the new company “MergedCo”.
- The new company will have the 2nd largest spectrum holding amongst all operators in India.
- It will have an asset base of over Rs 65,000 crore (USD 9.7 billion) and net worth of Rs 35,000 crore (USD 5.2 billion).
- The whole transaction will be completed in 2017.
With this merger, the mobile subscribers of both telecom operators will have access to the 4G LTE services in the sub-1 GHz band across all 22 telecom circles. Which is under RCOM’s existing nation-wide spectrum sharing arrangements with Reliance Jio.