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Boost to Anil Ambani as DoT clears Reliance Communications – Sistema Shyam merger

The merger between Sistema Shyam and Reliance Communications promises Rs 700 crore extra income and two million new users for Anil Ambani's telco.

Edited by: India TV Business Desk, New Delhi [ Updated: October 24, 2017 9:28 IST ]
Anil Ambani-led Reliance Communications owes over Rs 45,000
Anil Ambani-led Reliance Communications owes over Rs 45,000 crore to a consortium of banks.Photo:PTI

In some much-needed relief for Anil Ambani-led Reliance Communications (RCom), The Department of Telecommunications has cleared the merger of Sistema Shyam Teleservices with Reliance Communications.

The deal, that will reduce the number of mobile operators in the country to ten, comes soon after merger talks between debt-ridden RCom with telecom operator Aircel collapsed early this month.

"Reliance Communications Limited (RCOM) has received the Department of Telecommunications (DoT) approval for the demerger of the wireless business of Sistema Shyam Teleservices Limited (SSTL) into RCom," the Anil Ambani-led telecom firm said in a statement.

According to a PTI report, the deal was cleared by the DoT on October 20.

The deal will see all wireless business assets of SSTL come under RCom, although the MTS brand will continue to operate.

SSTL will gets 10 percent stake in RCom as per the terms of the deal.

"With this, Rcom will acquire approximately 2 million customers and additional annual revenues of around Rs 700 crore. In addition, RCom will acquire 30 MHz of the most valuable and superior 800/850 MHz band spectrum, ideally suited for 4G LTE services, to complement its own unique nationwide footprint," the statement said.

The merger of SSTL will also extend validity of RCom's spectrum portfolio in the 800 and 850 MHz band in eight important circles -- Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal -- by a period of 12 years from 2021 to 2033.

RCom has assumed the liability to pay Rs 390 crore per annum for the next eight years to the DoT which is due for spectrum purchased by SSTL.

The transactions related to the deal are expected to close by the first week of November 2017, RCom said. Shares of RCom closed at Rs 17.7 a unit, up by 7.6 per cent compared to the previous close on the BSE on Monday.

A consortium of lenders had given the Anil Ambani-led company seven months’ time to pare its Rs 45,733 crore debt and service loans regularly. As part of the strategic debt restructuring scheme, banks will be able to convert their loans to the company into equity after seven months.

(With PTI inputs)

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