Mumbai: Debt-reeling telecom operator Reliance Communication Ltd’s (RCom) is set to feel the repercussions of its decision to call off the merger with Aircel as asset manager Brookfield will now have to pay less than the agreed amount for a 51 per cent stake in the company as RCom’s asset value dropped ever since.
According to a report in Livemint, the Canadian alternative asset manager Brookfield and network operator RCom had in December agreed upon a cash payment of Rs 11,000 crore for the 51 per cent stake in the company. “RCom and Brookfield are in discussions on the tower arm stake sale and are deeply engaged. The final deal value will be different due to the lack of additional Aircel tenancies, which would have come in, and will be announced in the next few weeks,” said Punit Garg, president (telecom business) and executive director of RCom.
On Sunday, a statement from RCom said that the merger agreement with Aircel lapsed with “mutual consent”. RCom and Aircel had signed binding agreements in September 2016 for the merger of their mobile businesses.
Apart from “regulatory hurdles”, RCom blamed unprecedented competition as one of the reasons for the collapse of the deal. "Unprecedented competitive intensity in the Indian telecom sector together with fresh policy directives, adversely impacting bank financing for this sector, have also seriously affected industry dynamics. As a result of the various factors aforesaid, the merger agreement has lapsed," RCom said.
The company is currently saddled with a debt of USD 6.8 billion.
(With agency inputs)...