Reliance Communications (RCOM) share price jumped over 6 per cent on BSE after the company informed stock exchanges that the telecommunications service providers on Monday announced the signing of definitive documents for demerger of Sistema’s Indian wireless business, carried on by Sistema Shyam Teleservices (SSTL) under the MTS brand, into RCOM.
The share price of RCOM closed 6.18 per cent up at Rs 79.90.
Under the agreement, RCom will acquire around 9 million customers and around Rs 1,500 crore of annual revenues by virtue of the transaction. In addition, RCom will acquire SSTL’s most valuable and superior 800 / 850 MHz band spectrum, ideally suited for 4G LTE services, to complement its own unique nationwide footprint of minimum 5 MHz contiguous 800 / 850 MHz spectrum aggregating 148.75 MHz.
This will extend the validity of RCOM’s spectrum in 800 / 850 MHz band in 8 important circles by a period of 12 years from 2021 till 2033 (Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West) and West Bengal).
As result of the demerger, SSTL will acquire and hold a 10 per cent equity stake in RCom. In addition, RCom will assume the liability to pay the DoT instalments for SSTL’s spectrum, amounting to Rs 392 crore per annum for the next 10 years.
Post Closing of the deal, minority investors of SSTL will be given an option to exchange their shares in SSTL with the pro-rata RCOM shares held by SSTL.