The Department of Telecom (DoT) has approved the merger of Sistema Shyam Teleservices (SSTL) into Reliance Communications (RCom), a deal which will add around 2 million customers and annual revenue of around Rs 700 crore to the Anil Ambani-led company. RCom has reported a consolidated revenue of Rs 3,591 crore, down 33% year-on-year and an Ebitda of Rs 543 crore, a decline of 65.2% year-on-year for the quarter ended June 30, 2016. The company has a total subscriber count of 81.27 million as of July 2017. Besides, RCom also gains 30 Mhz of spectrum in the 800/850 Mhz band in eight circles — Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal — by a period of 12 years, from 2021 to 2033.
Spelling the terms of the merger agreement, RCom said that as a result of the demerger, SSTL will receive a 10% equity stake in the fully diluted equity share capital of RCom, which will also assume the liability to pay the DoT instalments for SSTL’s spectrum, amounting to Rs 390 crore per annum for the next eight years. While the wireless business assets of SSTL will go to RCom, the brand MTS will continue to operate.
The closure of the transaction is expected by the first week of November 2017, it added. SSTL is paying off all its existing debt on its own prior to closing. Also, the DoT nod comes as a relief for the debt-ridden RCom after its merger with Aircel collapsed earlier this month.