Reliance Communications to announce MTS merger on Monday

Reliance Mobile
Indian telecom network operator Reliance Communications is expected to finalize its merger with Sistema Shyam Teleservices on Monday.

On Monday, the board of Reliance Communications will  consider a merger arrangement with the India operations of Russian telecom giant MTS, said RCom in a filing with the Bombay Stock Exchange (BSE).

Once approved, this will be the first consolidation in the Indian telecom industry after the spectrum sharing and trading guidelines announced by the Central government.

HIGHLIGHTS

# MTS brand to exit from India
# Sistema may hold 8% stake in Reliance Communications
# First consolidation after spectrum trading and sharing regulation
# Tata Docomo missed opportunity
# Validity of Reliance Communications’ 850 MHz spectrum to enhance by 12 years

The merger move will result into the exit of MTS brand from India. Following the Supreme Court order on 2G in 2012, Sistema Shyam Teleservices has cut down its presence in India. The company also did not participate in spectrum auctions.

At present, Telenor India, Tata Docomo, Videocon Telecom and Aircel are also looking at initiatives to consolidate their business.

Anil Ambani-promoted Reliance Communications has been in talks with Sistema Shyam Teleservices (SSTL) since June to merge the latter’s Indian operations with itself. SSTL provides data and voice services in India under the MTS brand to 10 million subscribers across 450 towns.

“Reliance Communications has informed BSE that a meeting of the Board of Directors of the company will be held on November 2 to consider a scheme of arrangement for demerger of the telecom business undertaking of Sistema Shyam Teleservices into the company,” Reliance Communications informed the Bombay Stock Exchange.

The deal would extend the validity of the Reliance Communications spectrum by 12 years, IANS reported on Sunday.

“The proposed merger will be highly value-accretive for Reliance Communications, as it will, in eight important circles, extend the validity of the 850-MHz spectrum by a significantly long period of 12 years, all the way up to 2033,” Anil Ambani said at the company’s annual general meeting on September 30.

As part of the stock swap deal negotiated, Sistema would get a stake of 8-10 percent in the merged entity, while Reliance Communications would hold controlling stake.

The combined entity will have about 120 million subscribers, making it the fourth largest telecom operator in India, after Bharti Airtel, Vodafone India and Idea Cellular.

MTS India operates in nine circles – Delhi, Gujarat, Karnataka, Kerala, Kolkata, Rajasthan, Tamil Nadu, Uttar Pradesh (West) and West Bengal.

Reliance Communications has operations across 22 circles. Reliance Communications is also considering a spectrum sharing agreement with pan India 4G operator Reliance Jio Infocomm.

Baburajan K
[email protected]

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