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Done deal: RCOM and Aircel to merge their wireless business

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Reliance Communications (RCOM) has signed “definitive documents” for merging of its wireless business with Aircel Limited, RCOM said in a statement today. Both companies had sent in their definitive proposal in June for regulatory approval. Both RCOM and Aircel had originally entered into talks in December last year. In March RCOM extended the exclusivity period of discussions with Aircel by 60 days.

The agreement signed between the shareholders of Reliance, and Malaysia’s Maxis Communications Berhad (MCB)—the shareholders of Aircel will create a merged entity wherein both RCOM and MCB will hold a 50% stake each. The joint venture will have an asset base of over Rs 65,000 crore (~$9.7 billion) and net worth of at least Rs 35,000 crore ($5.2 billion). The merged company will be managed by “an independent professional team under the supervision of the Board”.

With merging of wireless business, RCOM’s overall debt will reduce by Rs 20,000 crore (~$3 billion) or over 40% of its total debt, and Aircel’s debt will reduce by Rs. 4,000 crore (~$ 600 million), upon completion of the transaction in 2017, added RCOM in a statement. RCOM will however continue to own and operate its data center, optic fibre and related wired telecom units. In addition, the joint venture will have one of the largest repository of spectrum holding which totals to 4448 MHz across the 850, 900, 1800 and 2100 MHz bands

Sistema deal awaiting approvals

Shareholders of Sistema Shyam Teleservices (SSTL), which owns the MTS brand in India, approved the merger of the company with RCOM, in April this year. They’re currently awaiting further approval from the Rajasthan and Bombay High Court, after which RCOM is expected to approach the DoT with further filings.

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Note that earlier in January, the BSE and NSE had both approved the merger deal following which in February, the Competition Commission of India too approved the merger deal.

RCOM CDMA migration

Earlier in June, it was reported that RCOM would shut down its CDMA services in all of its telecom circles except 4 circles – Rajasthan, Tamil Nadu, Kerala and Karnataka – in a bid to migrate CDMA customers to its 4G network. In the same month, Gurdeep Singh, CEO of RCOM’s Consumer Business said in an earnings call that CDMA dongles will be upgraded to 4G Wi-Pods at nominal rates.

RCOM’s migration from CDMA to 4G was carried out in phases, circle by circle within the next two months, i.e., end-July. Post the upgrade users will get access to 4G data services, while voice services will be provide on RCOM’s own network.

RCOM & RJIO spectrum sharing: RCOM and Reliance Jio had signed a deal in January to share 4G bandwidth in 17 circles using the 800MHz band. Additionally, Reliance Jio was also said to buy spectrum from RCOM in 9 circles for its impending 4G LTE roll-out. The  DoT had approved  deal between the two telcos last month.

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