It seems that the Ambani brothers are all set to rule the telecom market. Just a fortnight earlier, elder brother Mukesh Ambani, in a mega AGM, announced the launch of Reliance Jio, which took the entire telecom industry by storm. And, just yesterday, Anil Ambani-led Reliance Communications sealed a massive merger deal with much smaller rival Aircel.
Reliance Communications agreed to merge its wireless telecom business with Aircel to create the country's fourth biggest mobile phone operator with an asset base of more than Rs 65,000 crore.
In the largest consolidation in the country's telecom sector, RCom and Aircel's majority owner, Malaysia's Maxis Communications Berhad (MCB), announced the signing of definitive documents for the merger of their Indian wireless businesses.
What's the deal
RCom and Aircel will hold a 50% stake 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 telcos 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.
Facts about the deal
1) RCom is India's fourth-biggest telecom operator with almost 110 million customers, while Aircel ranks fifth with 84 million subscribers.
2) RCom had 9.8 % market share while Aircel had 8.5% share. Sistema, which RCom earlier merged with, had 0.7% share.
3) 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.
4) The deal will help RCom pare its debt by Rs 20,000 crore (or 40 % of the total debt on its books).
5) MTS (Sistema) will continue to hold 10 % stake in RCom, with no presence on the board.
6) Reliance Communications will continue to own and operate high growth businesses in the domestic and global enterprise space, Data Centres, optic fibre and related telecom infrastructure, besides owning valuable real estate.
7) The new entity will be renamed and rebranded.
8) The new entity will be managed by an independent team of professionals which will operate under the supervision of the board.
9) The company is expected to be listed on the stock exchange some time later.
10) The mammoth deal is expected to close in 2017.