The Competition Commission of India (CCI) has approved the proposed merger of Reliance Communications (RCOM) and Russian-owned Sistema Shyam Teleservices (SSTL), which operates under the MTS brand name, paving the way for the first major consolidation in the crowded sector for more than five years. The transaction has so far cleared all the legal and regulatory hurdles, although RCOM is still to hold a court-ordered meeting of shareholders in early March.
As previously reported by TeleGeography’s CommsUpdate, the merger deal will see SSTL’s mobile business demerged into RCOM, whilst SSTL will take a 10% equity stake in the latter. Further, RCOM will acquire SSTL’s LTE-suitable spectrum in the 800MHz range, thereby extending the validity of RCOM’s 800MHz frequencies in eight circles – Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, Uttar Pradesh West and West Bengal – by twelve years, from 2021 to 2033. RCOM will also assume the liability to pay the outstanding instalments to the Department of Telecommunications (DoT) for the spectrum, equating to around INR3.92 billion (USD59.83 million) per year for the next ten years. Prior to the closing of the transaction, however, SSTL intends to pay off its existing debt.