RCom- MTS merger To Bolster the Indian Telecom sector

DELHI, India - Nov. 3, 2015 - PRLog -- 2 November, 2015.Mumbai:  Reliance Communications, India’s most integrated telecom services provider, has announced a merger with Russia based Sistema’s Indian wireless business- Sistema Shyam Teleservices Ltd. (SSTL) which operates as MTS in India. This association has cleared the way for the launch of 4G services by Anil-Ambani led firm.

This is the first major consolidation in the domestic telecom sector since 2009 and the new entity now will acquire 9 million customers and approximately Rs. 1500 crore of annual revenues. In addition to this, this will also help RCom overtake as the holder of the biggest amount of superior 800/ 850 MHz band spectrum in India- which is ideally suited for 4G LTE services. The 8 important circles in which the validity of RCom’s superior spectrum will be extended by a period of 12 years from 2021 till 2033 are Delhi, Gujarat, Karnataka, Kerala, Tamil Nadu, Kolkata, UP (west) and West Bengal.

The merger also makes SSTL the holder of 10% equity stake in RCom. RCom will assume the liability to pay the DoT installments for SSTL’s spectrum, which amounts to Rs.392 crore per annum for the next 10 years.

Shares of RCom jumped nearly 4 per cent following the announcement and experts believe the development to be extremely positive for the sector as a whole.

Gurdeep Singh, President and Chief Executive Officer – Consumer Business at Rcom, reiterated the sentiments, saying, “The combination of our wireless business, through the demerger of SSTL wireless business into RCom for stock consideration will generate significant capex and opex synergies for mutual benefit.”

Mikhail Shamolin, President and CEO of Sistema, also concludes that it is a win-win situation for all. He said, “The merger of SSTL and RCOM’s telecom business is a milestone event. Despite the numerous challenges the telecom sector faced in recent years, the combination of two leading data service providers is a clear sign of progress for the Indian telecom industry. We are confident that SSTL’s entry into the equity capital of RCOM as a strategic investor will strengthen the competitive position of the combined company and provide subscribers with superior experience by fast-tracking the growth of LTE technology in India.”