RCom, Aircel to merge mobile business

The much-anticipated merger deal between Reliance Communications (R-Com) and Maxis Communications Berhad (MCB), promoters of Aircel has signed a final agreement for the merger of their wireless businesses in India. It was creating a company with a net worth of Rs. 35,000 crore and assets of Rs. 65, 000 crores.

Reliance Communications, controlled by Anil Ambani and Aircel’s parent Maxis Communications Bhd will be own 50 percent of the merger carries. The merging of Reliance wireless business with Aircel has been tied up following a months-long process.

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Currently, the Reliance Communications is the fourth largest mobile carrier by subscribers while Aircel ranks sixth in the list. By merging, the transaction of R-Com will reduce by Rs. 20,000 crores (USD 3 billion) while Aircel’s debt will down by Rs. 4,000 (USD 600 million) on closing in 2017.

The merger will create the India’s fourth largest telecom operator regarding customer base and revenues. The merger entity will have the second largest spectrum holding among all the operators with an aggregate bandwidth of 448 MHZ across 850, 900, 1800 and 2100 MHZs bands.

“Together with our partners, MCB, we are delighted to have taken the lead in consolidation of the Indian telecom sector, first, with RCom’s acquisition of the wireless business of SSTL (Sistema/MTS), and now, with the combination of our business with Aircel in a 50-50 joint venture with MCB,” Reliance Group Chairman Anil Ambani said.

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“This deal further reinforces MCB s commitment to India. Since acquiring Aircel in 2006, MCB has invested in excess of Rs 35,000 crore (USD 5.2 billion) into Aircel, making this one of the largest foreign investments into India, not only in the telecom industry but across all sectors,” MCB said.

Competition is intensifying further with the Reliance Jio, a new 4G telecom venture backed by Anil Ambani elder brother and the India’s richest man Mukesh Ambani. It started its operations from this month and expected to shake up the market with its cut-off rates.