Reliance Communications’ (RCom) shares advanced as much as 4% on Tuesday, helping telecom stocks gain even in a weak market.
Reliance Communications’ (RCom) shares advanced as much as 4% on Tuesday, helping telecom stocks gain even in a weak market. Billionaire Anil Ambani’s Reliance Communications announced its plans to merge with smaller wireless carrier Aircel.
RCom shares ended 2.2% at Rs 85.70 – the biggest gain in more than a week. The company has been the top performer in the 13-member BSE Telecom index in the past month.
Idea Cellular gained 0.9%, while Bharti Airtel rose 0.75% on the BSE. GTL Infrastructure surged more than 7%, while Tata Teleservices (Maharashtra) gained 1.8%. In contrast, the Sensex ended down 145 points or 0.56%.
RCom said it is considering the “potential combination” of its wireless operations with those of Aircel, it said in an exchange filing. Though the statement did not provide financial details, the company has 90 days to have exclusive talks with Aircel owners – Malaysia’s Maxis Communications Bhd and Sindya Securities & Investments.
India’s mobile-phone industry, the world’s second largest by subscribers, is ripe for consolidation as competition among the nation’s dozen carriers have driven down phone rates to levels rarely seen in other countries. Should Ambani succeed in buying closely-held Aircel and AFK Sistema’s Indian wireless unit – a deal announced last month – Reliance could nearly double its number of subscribers to more than 200 million.
As of the end of September, Aircel was the fifth-largest operator in India with 84 million subscribers, trailing Reliance, which had almost 110 million subscribers. Sistema had 8.36 million users.
The Aircel deal will be subject to regulatory, shareholder and other third-party approvals, according to Tuesday’s statement. The merger discussions exclude Reliance’s towers and fibre-optic infrastructure assets since they are being sold off.