RCOM and SSTL in exclusive merger talks

16 Jun 2015

Reliance Communications (RCOM) and Russian-owned Sistema Shyam TeleServices (SSTL) are engaged in exclusive talks to merge their businesses via a stock swap, the Economic Times reports. RCOM noted in a statement that an agreement had not yet been reached, saying that: ‘The discussions are indicative and non-binding in nature, and remain subject to due diligence, definitive documentation and approvals, as may be necessary…There is no certainty that any transaction will result.’ The paper cites an unnamed source close to the matter as saying that a share swap deal could see SSTL’s owners Sistema take a 10% stake in the combined company, although another source suggested that the Russian group could infuse more funds into the firm to lift its stake to as much as 50%.

As previously reported by CommsUpdate, SSTL has admitted that the CDMA technology it uses for wireless services is ‘not very popular’ and is unlikely to be able to compete with 4G Long Term Evolution (LTE) once the platform becomes widely available. As such, the operator revealed earlier this month that it was planning to migrate to LTE, but as its current spectrum holdings are insufficient for LTE, the cellco was looking to enter into an agreement with other cellcos with 800MHz spectrum. SSTL purchased 800MHz CDMA frequencies in eight circles in November 2012 after its previous concessions were cancelled, but the cellco has refused to take part in subsequent auctions, accusing the regulator of unfairly skewing auctions in favour of GSM providers. For its part, dual technology provider RCOM bought additional 800MHz spectrum in eleven circles in the auction earlier this year.

India, Reliance Communications (RCOM), Sistema Shyam TeleServices (SSTL, MTS India)