Fair trade regulator Competition Commission of India (CCI) has given its nod to Anil-Ambani owned Reliance Communications’ (RCom) acquisition of Russian conglomerate Sistema’s Indian telecom unit, Sistema Shyam Teleservices (SSTL), that operates under the MTS brand.
In a regulatory filing to the Bombay Stock Exchange on Monday, RCom stated : “We wish to inform you that the Competition Commission of India has approved transfer of telecommunications undertaking of Sistema Shyam Teleservices to the company”.
In November last year, RCom had announced acquisition of Sistema’s Indian telecom unit in an all-stock deal that once completed will create a telecom company with 118 million subscribers.
As per the deal, SSTL will hold about 10 % stake in RCom and pay off its existing debt before closing the deal.
Russian tycoon Vladimir Evtushenkov-controlled AFK Sistema currently holds 56.68 % stake in SSTL while the Russian government owns 17.14 % interest.
India’s Shyam Group has 23.98% stake and the rest is owned by small investors.
SSTL offers mobile telephony services under the MTS brand across nine telecom circles in the country. The deal will give RCom access to spectrum or airwaves in the 850 megahertz (MHz) band that can be used for 4G services which it plans to start by the year-end.
Also, it will be able to extend the validity of its licence by 12 years in eight high revenue-generating telecom circles of Delhi, UP (West), Kolkata, West Bengal, Gujarat, Tamil Nadu, Karnataka and Kerala.
The merger will not just help RCom compete with the existing players but consolidate its position ahead of Mukesh Ambani’s foray into the sector with 4G services under the Reliance Jio brand later this year.
While SSTL will pay off its existing debt, RCom will assume the liability to pay the government instalments for SSTL’s spectrum, amounting to R392 crore per annum for the next 10 years.