Indian telcos Reliance Communications and Aircel, which have been in merger talks since last December, have reportedly decided to pool their mobile assets into a joint venture that they will own 50-50.
Indian telcos Reliance Communications (NSE:RCOM) and Aircel, which have been in merger talks since last December, have reportedly decided to pool their mobile assets into a joint venture that they will own 50-50.
The new company will consist of RCom’s wireless business and smaller, mobile-only player Aircel, the Economic Times cited people familiar saying.
RCom, controlled by billionaire Anil Ambani (pictured), and Aircel, owned by Malaysia’s Maxis Communications (MYX:6012) and its local partner Sindya Securities and Investments, will each transfer Rs140bn (US$2.05bn) of debt into the new entity, instead of the initially planned Rs100bn (US$1.5bn), the report stated.
The deal is expected to close by 30 September.
The joint venture, which will be rebranded, could be listed about a year after closing, depending on market conditions, one person was cited saying.
RCom, the country’s fourth largest mobile operator, will then focus on data centres, direct-to-home television, fibre and enterprise and subsea cable operations, the person added.
Ambani will remain RCom’s biggest shareholder with a 55% stake, while Sistema Shyam Teleservices(SSTL), with which the telco is also merging, will have a 10% stake. The remaining stock will be in free float.
RCom entered into a 90-day exclusivity period with Aircel’s shareholders on 22 December 2015 to consider a potential merger. Earlier this month, local reports suggested the two companies may have trouble reducing their debt to the required levels before the exclusivity period expired.
Last week, RCom won approval from the Indian competition commission to acquire SSTL, which trades as MTS India, from Russian conglomerate Sistema (LSE:SSA)
To help cut debt, RCom entered into a non-binding agreement to sell its tower assets and related infrastructure to US firms TPG and Tillman Global Holdings (TGH) last December.
The telco, which had a debt pile of US$5.97bn at the end of December 2015, has said that TPG and Tillman will also look at buying its nationwide fibre optic assets in a separate transaction. Aircel’s debt reportedly totalled Rs200bn (US$2.92bn) at the end of last year.