RCom-Sistema Shyam Merger Gets DoT Approval

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RCom-Sistema Shyam Merger Gets DoT Approval
Highlights
  • DoT has given a green signal to RCom-SSTL merger
  • This will bring down the number of telcos in country to just 10
  • Despite the merger, MTS brand will continue to operate

The Department of Telecom (DoT) has cleared the merger of Sistema Shyam Teleservices with
Reliance Communications, a deal that will reduce the number of mobile operators in the country to ten.

"Reliance Communications Limited (RCom) has received the Department of Telecommunication's (DoT) approval for the demerger of the wireless business of Sistema Shyam Teleservices Limited (SSTL) into RCom," the Anil-Ambani led telecom firm said in a statement.

According to a source, the deal was cleared by the DoT on October 20.

Under the deal, all wireless business assets of SSTL will come under RCom. However, brand MTS will continue to operate. SSTL will gets 10 percent stake in RCom as per the terms of the deal.

"With this, Rcom will acquire approximately 2 million customers and additional annual revenues of around Rs. 700 crores. In addition, RCom will acquire 30MHz of the most valuable and superior 800/850 MHz band spectrum, ideally suited for 4G LTE services, to complement its own unique
nationwide footprint," the statement said.

The nod brings some relief for the debt-ridden RCom after its merger deal with another telecom operator Aircel collapsed early this month. The merger of SSTL will also extend validity of RCom's
spectrum portfolio in the 800 and 850 MHz band in eight important circles - Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal - by a period of 12 years — from 2021 to 2033.

RCom has assumed the liability to pay Rs. 390 crores per annum for the next eight years to the DoT which is due for spectrum purchased by SSTL. The transactions related to the deal are expected to
close by the first week of November 2017, RCom said. Shares of RCom closed at Rs. 17.7 a unit, up by 7.6 percent compared to the previous close on the BSE Monday.

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