24 October 2017 07:01:42 IST

RCom-Sistema merger gets final nod from DoT

With this, RCom will acquire approximately two million customers

Although its deal with Aircel did not go through, Reliance Communications Ltd has something to cheer about with the Department of Telecommunications approving the company’s merger with the wireless business of Sistema Shyam Teleservices Ltd.

With this, RCom will acquire approximately two million customers and additional annual revenues of around ₹700 crore. In addition, the operator will acquire 30 MHz in the 800 MHz band, which is useful for 4G services.

Spectrum sharing with RJio

RCom is likely to offer this spectrum to Reliance Jio in a sharing agreement.

Sistema has spectrum in eight circles (Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal). This spectrum has validity up to 2033. Most of RCom’s existing holdings in the 800 MHz band are set to expire in 2021.

As a result of the de-merger, SSTL will receive a 10 per cent equity stake in the fully diluted equity share capital of RCom.

In addition, RCom will assume the liability to pay the DoT instalments for SSTL’s spectrum, amounting to ₹390 crore per annum for the next eight years.

Will keep ‘MTS brand’

The closure of the transaction is expected by the first week of November. RCom said that it will retain Sistema’s MTS brand. The deal, however, does not do much in terms of settling RCom’s debt of nearly ₹40,000 crore. Post the failure of the proposed merger with Aircel, the deal to sell a stake in RCom’s tower unit is also being reworked with PE firm Brookfield.

According to senior executives at RCom, the tower unit, along with other assets, including real estate and optical fibre infrastructure, is being put on the block to raise over ₹20,000 crore over the next few months. Lenders are also not keen on converting the debt into a non-performing asset as they may then be forced to take a hair cut.