Reliance Communications has acquired MTS India with the prime objective of adding spectrum in 800 – 850 MHz band.
As part of the part of the merger, Reliance Communications will offer 10 percent stake to MTS India. Prior to the transaction’s completion, SSTL plans to pay off existing debt. MTS India had debt of INR 43.12 billion at the end of 30 June 2015.
Reliance Communications will make payment for the spectrum licensing fees payable by MTS India to the Department of Telecommunications. Both companies also agreed on an appropriate earn-out mechanism in relation to disputed spectrum contiguity charges claimed by the Department of Telecommunication.
KEY FACTS ABOUT RELIANCE COMMUNICATIONS
# Reliance Comm revenue up 0.3% to Rs 5,541 crore
# India operations revenue up 1.5% to Rs 4,791 crore
# Global operations revenue up 4.1% to Rs 1,117 crore
# ARPU grew 2.9 percent to Rs 140
# Data customer base rose 23.8% to 35.4 million
# 3G customer base of 17.9 million
# Data traffic rose 68% to 92.8 billion MB
# Profit up 34% to Rs 177 crore in Q1
FACTS ABOUT MTS INDIA
# MTS India has presence in 9 circles
# MTS revenue grew 12 percent in Q2 to $59.26 million
# ARPU increased 5% to INR 134
# Non-voice revenues rose 13.4%
# Data card subscriber base grew 8.9% to 1.9 million
# Non-voice revenues contribute 55.3%
# MTS HSD services cover over 1,000 towns
# OIBDA loss of INR 54.1 crore
# OIBDA positive in 6 out of its 9 operating circles
# invested $5.3 million during Q2 2015
The transaction is expected to close in the second quarter of 2016.
Post closing of the deal, minority shareholders of SSTL will be given an option to exchange their shares in SSTL with the pro-rata Reliance Communications shares held by the company.
“Despite the numerous challenges the sector faced in recent years, the combination of two leading data service providers is a clear sign of progress for the Indian telecom industry,” said Mikhail Shamolin, president and CEO of Sistema.
Reliance Communications will benefit from significant Capex and Opex synergies SSTL’s spectrum holdings in 800 – 850 MHz band will strengthen spectrum portfolio of Reliance Communications.
Anil Ambani-promoted Reliance Communications can utilize the spectrum to launch LTE services in 8 important circles in the country till the year 2033.
It is not known whether Sergey Savchenko, CEO of Sistema Shyam TeleServices, will be part of Reliance Communications after the consolidation move. There is also no information on the possible job cut.