Indian telco Reliance Communications and the owners of smaller rival Aircel have extended their exclusive talks on combining their wireless businesses by 60 days. RCom noted that the parties would expect to derive “substantial benefits”, including opex and capex synergies and improved revenues, from such a tie-up.
Indian telco Reliance Communications (NSE:RCOM) and the owners of smaller rival Aircel have extended their exclusive talks on combining their wireless businesses by 60 days.
The exclusivity period between RCom, part of billionaire Anil Ambani’s (pictured) Reliance Group, and Aircel owners, Malaysia’s Maxis Communications (MYX:6012) and local partner Sindya Securities and Investments, will now expire on 22 May 2016, RCom said in a stock exchange filing.
RCom, the country’s fourth largest mobile operator, noted that the parties would expect to derive “substantial benefits”, including opex and capex synergies and improved revenues, from such a tie-up. Aircel is the fifth largest player, according to data by regulator Trai.
Any deal would be subject to completion of due diligence, definitive documentation and regulatory, shareholder and other third-party approvals, the telco added.
RCom entered into a 90-day exclusivity period with mobile-only player Aircel’s shareholders on 22 December 2015 to consider a potential merger. In late February, the parties reportedly decided to pool their mobile assets into a 50:50 joint venture which could eventually be listed.
But local reports have suggested that the two companies may have trouble reducing their debt to the required levels before the exclusivity period expired.
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.
However, an Economic Times report this month said Tillman was searching for a new buyout partner as TPG had valued the assets at significantly less than the Rs215bn (US$3.2bn) initially discussed.
Separately, RCom recently won approval from the Indian competition commission to acquire number nine mobile player SSTL, which trades as MTS India, from Russian conglomerate Sistema, the Russian government and its local partner Shyam Group. The companies have said they expect this deal to close in the second quarter of this year.