Telecom Department Okays Reliance Communications-Sistema Shyam Merger

The Department of Telecom (DoT) has cleared the merger of Sistema Shyam Teleservices with Reliance Communications, a deal that will reduce the number of mobile operators in the country to ten.

"Reliance Communications Limited (RCOM) has received the Department of Telecommunication's (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 source, the deal was cleared by DoT on October 20.

Under the deal, all wireless business assets of SSTL will come under RCom. However, brand MTS will continue to operate.

SSTL will get 10 per cent 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 nod brings some relief for the debt-ridden RCom after its merger deal with another telecom operator Aircel collapsed early this month.

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 specrtrum 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.