Reliance Communication merges with Aircel

Reliance Communication had started its Preview Offer in May this year, but that was only for a limited number of people, mostly Reliance employees. Soon after that the Jio SIM was available to people if they had a Lyf, Samsung, or LG phone. And a little before its public launch on September 5, the Preview Offer SIM was virtually available to everyone.

Reliance Communication merges with Aircel

As we know that due to more popularity of Reliance Jio 4G, Reliance Communications (RCom) board approved the company’s merger with Aircel, is one of the biggest deals in the telecom space in recent times.

 

Reliance Jio and aircel

Anil Ambani led Reliance Communications and Aircel announced merger in largest-ever consolidation deal in Indian telecom sector.

Anil Ambani led Reliance Communications Ltd (R-Com) and Aircel are likely to announce their. Reliance Communication or RCom and Aircel had been talks for the merger since December last year.

But now the deal is finally approved. The deal will help reduce Reliance Communication’s debt by Rs. 20,000 crore, or more than 40 per cent of its total debt, while Aircel’s debt will fall by about Rs. 4,000 crore, the companies said.

 

RComm-Aircel likely to announce $6 bn merger soon

 

It also comes at a time when Reliance Jio has made an aggressive entry into the telecom industry, sending jitters among incumbents. Reliance communication and MCB will each hold a 50% stake in the merged entity (“MergedCo”), with equal representation on the Board of Directors and all Committees. The company will be managed by an independent professional team under the supervision of the Board.

Reliance Communications-Aircel merger deal

According to this deal of Reliance with Aircel, in which Reliance Communications will demerge its wireless business and merge it with Aircel, has been tied up following a months-long process. R-Comm and Aircel will hold 50 percent stake each in the combined entity and both companies will transfer debt worth Rs 14,000 crore each. The entity will be listed at a later date. The combined entity will also have net worth of Rs 35,000 crore and debt of Rs 28,000 crore. In terms of subscribers, a Rel Comm-Aircel combine will be the country’s second largest telecoms player, with 19 crore users. Airtel (25 crore), Vodafone (19.8 crore) and Idea (17.5 crore) will comprise the top four players. However, in revenue market share, the combined business will trail Idea with 10 percent share compared with Idea’s 20.1 percent. Airtel and Vodafone will have revenue market share of 31.6 percent and 22.6 percent.

Reliance Communication, Aircel merge to create Rs 65,000 crore telecom giant

The merger will create India’s fourth largest telecom operator by customer base and revenues while the merged entity will have the second-largest spectrum holding among all operators. After Reliance Company’s daring Rs 1.5 lakh crore Reliance Jio gamble, country’s two biggest telecom giants Reliance Communications and Aircel today announced the merger of their wireless operations to create a combined entity with assets worth Rs 65,000 crore.

The mega merger is termed as the biggest consolidation deal in India’s telecom sector.

 

Reliance communication

 

  • Merged entity will be India’s 3rd biggest cellular carrier by user base
  • Transaction to cut Reliance Communications debt by Rs.20,000 crore
  • Company will have second-largest spectrum holding amongst all operators

RCOM’s overall debt will reduce by Rs 20,000 crore

RCOM’s overall debt will reduce by Rs 20,000 crore ($3 billion) or over 40% of its total debt, and Aircel’s debt will reduce by Rs 4,000 crore (4600 million), upon completion of the transaction in 2017. The Merged telecom company will be one of India’s largest private sector companies, with an asset base of over Rs 65,000 crore ($9.7 billion) and net worth of Rs 35,000 crore ($5.2 billion), said Reliance’s release. The MergedCo will have the second-largest spectrum holding amongst all operators, aggregating 448 MHz across the 850, 900, 1800 and 2100 MHz bands, and will enjoy enhanced business continuity through extended validity of spectrum holdings till 2033-35, the release added.

Reliance with Aircel

Commenting on the merger, Anil Ambani, Chairman, Reliance Group, said, “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 Ltd. in a 50:50 Joint Venture with MCB. We expect this combination to create substantial long term value for shareholders of both, RCOM and MCB, given the benefits of the wide-ranging spectrum portfolio and significant revenue and cost synergies.”

 

Also Read : How to Use Reliance Jio 4G Sim in 3G Phone

 

The deal suggest that the merger will create a subscriber base of 190 million with Bharti Airtel having a subscriber base of 251 million, followed by Vodafone with 198 million and Idea Cellular with subscriber base of 175 million. Reliance Communication has spent Rs 5,384 crore in the 850 MHZ space. Share price of the company on Wednesday ended 2.72 per cent up at Rs 51.05. The announcement came after market hours.

The much-anticipated $6-billion merger between Anil Ambani-led Reliance Communications BSE 2.72 % (RCom) and Aircel is expected to be announced this week, paving the way for what would be the first in-market telecom merger of a national scale in the country, said officials in the know.

The matter is likely to come up for discussions at the RCom board meeting scheduled for Wednesday to consider and approve unaudited financial results for the quarter ended June.

 

Merger with Aircel likely this week after Reliance Communication Board meeting

As per the As per the terms, RCom will hive off its wireless business into a separate arm, a special purpose vehicle, in form of a slump sale, leaving behind the tower and overseas arms. The arm, in turn, will get merged into the mobile business of Maxis-owned Aircel. Partners will have 50:50 ownership of this new entity that will remain unlisted in initial years and is likely to operate under a new brand name.

 

Also Read : Reliance Jio Supportable Device Lists

 

Both have agreed to bring in $580 million each to create a Rs 7,600-crore equity pool for the new entity to invest further in capex and grow business, said the sources mentioned above. Both will also transfer Rs 14,000 crore of their debt into it.

The merger comes in the backdrop of Reliance Jio Infocomm’s launch, the country’s only 4G technology network. Reliance Communications had started upgrading data customers to 4G on the back of Jio’s network some months ago.

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