Reliance Communications and Aircel to be merged to create 4th largest telco

Posted on:15 Sep 2016 18:03:08
Reliance Communications and Aircel to be merged to create 4th largest telco
15 September 2016 Current Affairs: Anil Ambani-led Reliance Communications and Maxis Communications Berhad (MCB), promoters of Aircel, on 14 September 2016 agreed to merge their wireless businesses to form the fourth-largest telecom operator in the country.

The merger is termed as the biggest consolidation deal in India's telecom sector.

Highlights of the merger : R-Com will demerge its wireless business and transfer it to the new entity. Its standalone business will focus on the enterprise segment and data centre businesses. Sistema will continue to hold 10 per cent in standalone R-Com.Both R-Com and Maxis will hold 50 per cent each in the new entity.

The merged company will be one of India’s largest private sector companies. It will have an asset base of over 65000 crore rupees and net worth of 35000 crore rupees.The entity will enjoy substantial benefits of scale driving significant revenue growth, and capex and opex synergies with a net present value of 20000 crore rupees.

The company will be managed by an independent professional team under the supervision of the board.After completion of the merger in 2017, RCom’s overall debt will reduce by 20000 crore rupees or over 40 per cent of its debt.Aircel’s debt will reduce by 4000 crore rupees.The entity will have the second-largest spectrum holding amongst all operators, aggregating 448 MHz across the 850, 900, 1800 and 2100 MHz bands. It will enjoy enhanced business continuity through extended validity of spectrum holdings till 2033-35.

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