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RCOM and Aircel ink merger deal

15 Sep 2016

Reliance Communications (RCOM) and Aircel, India’s fourth and fifth largest cellcos by subscribers, have signed a definitive agreement on the merger of their respective mobile operations, marking the largest consolidation in the Indian telecoms market to date. Under the agreement, RCOM and Aircel parent Maxis Communications Berhad (MCB) will each hold a 50% stake in the combined entity, currently referred to as ‘MergedCo’, with equal representation on the board of directors and all committees. The company will be managed by an independent professional team, under the supervision of the board. Following the completion of the deal in 2017, RCOM will reduce its overall debt by INR200 billion (USD2.98 billion), whilst Aircel’s debt will reduce by INR40 billion.

The combined entity would leapfrog Idea Cellular to become the third largest operator by subscribers nationwide, as well as ranking in the top three in terms of subscribers and revenues in twelve key circles. Perhaps more importantly though, the cellco will have the second largest spectrum portfolio, with 448MHz across the 850MHz, 900MHz, 1800MHz and 2100MHz bands with validity until 2033-2035.

Post-merger, RCOM will continue to own and operate its enterprise, data centre, and telecom infrastructure businesses independently of the enlarged mobile firm. Commenting on the group’s ongoing strategy, Reliance Group’s chairman Anil Ambani explained: ‘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 Sistema Shyam Teleservices (SSTL/MTS India), and now, with the combination of our business with Aircel in a 50:50 joint venture with MCB. 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.’

India, Aircel, Maxis, Reliance Communications (RCOM), Vi (Vodafone Idea Limited, VIL)

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