New Delhi: Reliance Communications (RCom) and Russian conglomerate Sistema’s Indian telecom subsidy Sistema Shyam Teleservices merger has received green signal from the telecom department. The nod brings some relief for the debt-ridden RCom after its merger deal with another telecom operator Aircel collapsed early this month.
“Reliance Communication has received the department of telecommunication’s (DoT) approval for the demerger of the wireless business of Sistema Shyam Teleservices Limited (SSTL) into RCom,” RCom said in a statement.
It said that as a result of the merger, RCom will acquire around 2 million customers and additional annual revenues of around Rs 700 crore. “In addition, RCom will acquire 30 MHz of the most valuable and superior 800/850 MHz band spectrum, ideally suited for 4G LTE services, to complement its own nationwide footprint,” it said.
This will result in extension of the validity of RCom’s spectrum portfolio in the 800/850 MHz band in eight circles (Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal) by a period of 12 years-from 2021 to 2033.
As a result of the demerger, SSTL will receive a 10 per cent equity stake in the fully diluted equity share capital of RCom. In addition, RCom will assume the liability to pay the DoT instalments for SSTL’s spectrum, amounting to Rs 390 crore per annum for the next 8 years. The closure of the transaction is expected by the first week of November 2017.