Reliance Communications says MTS merger to be closed in 2 weeks, gets DoT nod

Reliance Communication Ltd said it received the approval of Department of Telecommunication (DoT) for its merger with Sistema Shyam Teleservices Limited or SSTL, which runs MTS branded services in India.

With this, the Anil Ambani Group company has received all the major regulatory approvals for the merger. The closure of the transaction is expected by the first week of November 2017, it said.

“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,” it said.

Due to a traditional practice, the validity of RCom’s own spectrum will be increased due to the merger.

The merger “will result in extension of the validity of RCOM’s spectrum portfolio in the 800-850 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,” the company said.

Shareholders of SSTL will receive a 10% equity stake in RCOM.

The Anil Ambani company said will assume the liability to pay the DoT instalments for SSTL’s spectrum, amounting to Rs 390 crore per annum for the next 8 years.

Reliance Communications has been caught in rough weather in recent months due to the shift of data services from 3G to 4G. The company has inked a deal with Reliance Jio, controlled by Anil Ambani’s brother Mukesh, that gives it the right to use Jio’s spectrum and network to operate its own 4G service across the country.

It is expected that the company will eventually morph into a 4G-only firm. At present, it has GSM and 3G operations in several circles.