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Reliance Communications, Aircel Wireless Business Merger to Create Rs 65,000 Crore Entity

(Image: Aircel)

(Image: Aircel)

The announcement was made after the closing bell on Indian stock exchanges, where the shares of Reliance Communications ended at Rs 51.05, up Rs 1.35 or 2.72 per cent over the previous close.

Mumbai: With India's telecom space hotting up to competition and just ahead of the largest spectrum auction due from next month, Reliance Communications on 14 September announced yet another pact to consolidate its wireless operations - this time with Aircel.

Officials said in this unique deal, the wireless operations of Reliance Communications will be merged with Aircel and the new entity will be renamed, along new re-branding. The new company could also be saddled with a debt of Rs 28,000 crore, equally divided between the two groups.

But for the promoters of the two groups, the debt will reduce by Rs 20,000 crore or over 40 per cent in the case of Reliance Communications, and Rs 4,000 crore for Maxis upon completion of the transaction, expected in 2017.

The board will have equal representation from the two sides, with 50 per cent shareholding each, said a statement from Reliance Communications.

"We expect this combination to create substantial, long-term value for the shareholders of both Reliance Communications and Maxis (holding arm of Aircel), given the benefits of wide-ranging spectrum portfolio and significant revenue and cost synergies," Chairman Anil Ambani said.

"Since acquiring Aircel in 2006, Maxis has invested in excess of Rs 35,000 crore into Aircel, making this one of the largest foreign investments into India, not only in the telecom industry but across all sectors," the Malaysian company said.

"The magnitude of this investment, and the further equity commitment in support of this deal, are underpinned by Maxis' belief in the long term growth potential of both India and the Indian telecom sector," it added.

In November last year, Reliance Communications had announced the takeover of the telecom business of Indo-Russian venture Sistema Shyam (brand name MTS) in a deal valued at Rs 5,000 crore ($730 million), involving both a stock-swap and payment towards spectrum.

This business also goes to the new entity to be formed with Aircel, which will have an impressive 451 MHz of spectrum pan-India - Aircel's 187.6 MHz, Sistema Shyam's 39.4 MHz and Reliance Communication's 224 MHZ.

This will be the second-largest spectrum holding amongst all operators, said the company, spread over 448 MHz, 850 MHz, 900 MHz, 1,800 MHz and 2,100 MHz bands. It will enjoy an enhanced business continuity through extended validity of spectrum holdings till 2033-35.

Aircel is India's fifth largest GSM-based mobile service provider with a subscriber base of 65.1 million. Following the merger, officials said, the subscriber base of Sistema Shyam, Aircel and Reliance Communications wireless combo will be over 180 million customers.

Aircel is majority owned by Malaysia's Maxis Communication and Sindya Securities and Investments.

The announcement was made after the closing bell on Indian stock exchanges, where the shares of Reliance Communications ended at Rs 51.05, up Rs 1.35 or 2.72 per cent over the previous close.


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