RCom, Aircel Merger To Create Fourth Largest Mobile Player

After the Mukesh Ambani-led Reliance Jio shook-up the mobile data business in India, the expected consolidation process began in the industry with younger brother Anil Ambani-led Reliance Communication (R-Comm) announcing its decision to merge its wireless telecom business with the Maxis Communications-owned Aircel.
The merger will create the country’s 4th-biggest mobile phone operator with asset base of more than Rs 65,000 crore.
RCom and Aircel’s majority owner, Malaysia-based Maxis Communications Berhad (MCB), announced that they had signed a definitive agreement for the merger of their Indian wireless businesses on Monday. RCom’s tower, optic fibre portfolio and its undersea cables arm Global Cloud XChange will be kept out of the ambit of the merger.RCom and Aircel will hold 50 per cent each in the new company. The board of the new company will have equal representation from the two sides.
“The RCom-Aircel combination will create a strong operator clearly ranked amongst India’s top 4 telecos by customer base and revenues, also ranking amongst the top three operators by revenues in 12 important circles,” both the firms said in a joint statement published in TOI.
According to RComm, this is the second-largest spectrum holding among all operators and spreads across 448 MHz, 850 MHz, 900 MHz, 1,800 MHz and 2,100 MHz bands. It will have a customer base of about 194 million, including 110 million of RComm and 84 million of Aircel ranks. According to reports, this will be the second largest with others being Airtel’s 250 million, Vodafone’s 198 million and Idea’s 175 million.RCom is India’s 4th-biggest telecom operator with almost 110 million customers, while Aircel ranks fifth with 84 million subscribers.
Both the companies will transfer Rs 14,000 crore of debt each to the joint venture, taking the total debt of the new company to Rs 28,000 crore, excluding Rs 6,000 crore of spectrum payment liability.
The deal will help RCom pare its debt by Rs 20,000 crore (or 40 per cent of the total debt on its books).
MTS (Sistema) will continue to hold 10 per cent stake in RCom, with no presence on the board. The new entity will be renamed and re-branded. It will be managed by an independent professional team under the supervision of the board, the press release said. It will also be listed at a later stage. The deal is expected to close in 2017.