Biggest Merger: RCom-Aircel to Form Telecom Firm Worth Rs 35K Cr

The merged entity will have an impressive 451 MHz of spectrum pan-India.

• Reliance Communications and Aircel’s is the biggest telecom merger in India, now worth Rs 35,000 crore.
  Both Reliance Communications and Aircel hold 50 percent ownership in the entity.
  
• This deal makes Reliance Communications the second largest spectrum footprint after Reliance Jio.
  
• Reliance Communications gets access to Aircel’s entire 2G, 3G and 4G spectrum network in India
  

With India’s telecom space hotting up to competition and just ahead of the largest spectrum auction due from next month, Reliance Communications on Wednesday 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 named and branded. 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 percent in the case of Reliance Communications, and Rs 4,000 crore for Maxis Communications (holding arm of Aircel), upon completion of the transaction expected in 2017.

We expect this combination to create substantial, long-term value for the shareholders of both Reliance Communications and Maxis, given the benefits of wide-ranging spectrum portfolio and significant revenue and cost synergies.

Anil Ambani, Chairman, Reliance Communications

This comes after the Reliance Communications move November last year when it 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.

Merged Entity Will Have Second Largest Spectrum Base

The new entity 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 among 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 2033-2035 MHz.

The merged company will also be one of India’s largest private sector companies, with an asset base of over Rs 65,000 crore and net worth of Rs 35,000 crore.