New Delhi : Telecom operators Reliance Communications and Aircel Sunday terminated their mobile business merger deal. “Merger of mobile business of RCom and Aircel lapses with mutual consent,” Reliance Communications said in a release. Both the telcos had signed binding agreements in September 2016 for the merger of RCom’s mobile businesses with Aircel. Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction, he Anil Ambani-led firm said. “Unprecedented competitive intensity in the Indian telecom sector, together with fresh policy directives adversely impacting bank financing for this sector, have also seriously affected industry dynamics. As a result of the various factors aforesaid, the merger agreement has lapsed. The Board approved the same,” it added. RCom was expecting a significant debt reduction post completion of merger with Aircel. The board of directors of the company at a meeting held Sunday reviewed the transformation programme and considered alternate plan to reduce debt.
The company said it will evaluate alternative plan for its mobile business by optimising spectrum portfolio and focus on 4G technology as part of its ongoing strategic transformation. RCOM has been given time till December 2017 to service its debt obligations by its lenders. It also said it will evaluate an “alternate plan for its mobile business”. According to the company, its board of directors considered alternate plans for debt reduction. “The board decided that RCOM will evaluate an alternate plan for its mobile business, through optimisation of its spectrum portfolio and adoption of a 4G-focused mobile strategy,” the company said in a BSE filing.
“RCOM already has the unique advantage of capital light access to India’s most extensive world class nationwide 4G mobile network through spectrum sharing and ICR agreements with Reliance Jio.” The company said that combination of the mobile business of Sistema Shyam Teleservices Ltd (SSTL) into RCOM is also expected to be completed this month. “The addition of SSTL’s valuable spectrum holdings in the 800-850 MHz band will strengthen RCOM’s spectrum portfolio by 30 Mhz, and extend the company’s spectrum validity period in eight important circles in the country till the year 2033,” the filing said.
Legal hurdle:
n Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction, RCom said
n RCom was expecting a significant debt reduction post completion of merger with Aircel
n The company will now evaluate an alternate plan for its mobile business
