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RCom-Aircel Deal: 10 Facts About Largest Merger In India's Telecom Sector

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RCom-Aircel Deal: 10 Facts About Largest Merger In India's Telecom Sector

Billionaire Anil Ambani-led RCom is India's fourth biggest telecom operator.

Billionaire Anil Ambani's Reliance Communications Ltd will combine its wireless business with smaller rival Aircel to create India's third-biggest cellular carrier by subscribers, the companies said on Wednesday, as intensifying competition fuels consolidation in the world's second-biggest telecom market.
Here are ten things to know
  • Reliance Communications or RCom will own half of the new entity created by the merger, while Aircel's parent, Maxis Communications Bhd or MCB of Malaysia, will own the other half, the two sides said in a joint statement.
  • RCom and Maxis will have equal representation on the board and committees of the new entity, which will have a brand new name.
  • 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.
  • Pegged as the biggest consolidation deal in the telecom sector, it creates an entity with assets worth Rs 65,000 crore and a net worth of Rs 35,000 crore.
  • The merger will create the third largest mobile operator by customer base, replacing Idea Cellular from that position; Bharti Airtel and Vodafone are one and two.
  • The merged entity will have the second-largest spectrum holding among all operators, aggregating 448 MHz across 850, 900, 1800 and 2100 MHz bands.
  • "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," Reliance Communication's chairman Ambani said in a statement.
  • In the first sign of sector consolidation, Reliance Communications had in November last year agreed to buy Russian conglomerate Sistema's Indian mobile phone business in an all-stock deal. It began exclusive talks with MCB in December last year.
  • RCom will continue to own and operate its high growth businesses in the domestic and global enterprise space, data centres, optic fibre and related telecom infrastructure, besides owning real estate.
  • Though the merger has been announced, it will need the approval of the Department of Telecom before the new company comes into existence. The process is likely to be completed only by next year.




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Highlights

1
Merged entity will be India's 3rd biggest cellular carrier by user base
2
Transaction to cut Reliance Communications debt by Rs 20,000 crore
3
Company will have second-largest spectrum holding amongst all operators

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