Russian conglomerate Sistema is in exclusive talks to merge its Indian unit Sistema Shyam Teleservices with Indian telco Reliance Communications (RCom).
The potential deal would take the form of a stock swap, Sistema said in a London Stock Exchange…
Russian conglomerate Sistema is in exclusive talks to merge its Indian unit Sistema Shyam Teleservices with Indian telco Reliance Communications (RCom).
The potential deal would take the form of a stock swap, Sistema said in a London Stock Exchange filing, noting that it would be subject to due diligence, definitive documentation and relevant approvals. No further details were provided.
Rumours about a potential tie-up between Sistema, controlled by Russian oligarch Vladimir Yevtushenkov, and RCom, controlled by Indian billionaire Anil Ambani, have persisted for some time. Last month, Yevtushenkov was cited saying he was discussing a potential joint venture with RCom. This followed a report stating that RCom was in talks to acquire Sistema’s Indian unit, which operates under the MTS Indian brand name.
Mumbai-based RCom is India’s fourth-largest mobile operator with more than 100 million customers, while MTS India is a relative minnow with about 10 million customers.
Bernstein Research analyst Chris Lane said MTS India’s small size means it needs to merge or sell.
Because it only owns small blocks of 800 MHz spectrum, and is present in just nine of the country’s more than 20 telecoms service circles, MTS India will struggle to offer LTE operations, Lane noted.
RCom’s own airwaves would be compatible, as it too owns some 800 MHz airwaves.
Lane noted that a merger would likely see both companies valued on a similar Enterprise Value/EBITDA ratio.
