Reliance Communications gets final nod from DoT for merger with Sistema

The long awaited merger between RCom and Sistema announced in 2015 is finally coming to a close. The deal has received its final approval from the Department of Telecom on Monday.

Reliance Communications gets final nod from DoT for merger with Sistema
Chairman of Anil Dhirubhai Ambani Group Limited, Anil Ambani at a press conference. Image Source: IANS
By ZeeBiz WebTeam
Updated: Mon, Oct 23, 2017
05:10 pm
Mumbai, ZeeBiz WebDesk
RELATED NEWS
Anil Ambani led Reliance Communications clocks second-quarter profit surge due to one-time gain Anil Ambani led Reliance Communications clocks second-quarter profit surge due to one-time gain
Ericsson settlement deal row: RCom seeks 60 days more for payment citing pending spectrum sale Ericsson settlement deal row: RCom seeks 60 days more for payment citing pending spectrum sale
Airtel, Idea, Reliance Communications shares sink by up to 12%; what's cooking in telecom? Airtel, Idea, Reliance Communications shares sink by up to 12%; what's cooking in telecom?
Cancellation of Reliance Communications spectrum will 'jeopardise' dues recovery by lenders: SBI to DoT Cancellation of Reliance Communications spectrum will 'jeopardise' dues recovery by lenders: SBI to DoT
Trouble brews for RCom, as DoT threatens to cancel licences Trouble brews for RCom, as DoT threatens to cancel licences

Key Highlights

  • The SSTL business in India will be carried on under MTS brand.
  • RCom Spectrum portfolio will be enhanced by 30MHz, valued at Rs 7,400 crore.
  • It will extend validity of RCom's spectrum in eight circles.

Reliance Communication on Monday announced that it received the final approval on its merger with Sistema from the Department of Telecommunication (DoT).

“Reliance Communication Limited (RCOM) has received the Department of Telecommunication’s (DoT) approval for the demerger of the wireless business of Sistema Shyam Teleservices Limited (SSTL) into RCOM,” the company said in a BSE filing.

“RCom spectrum portfolio will be enhanced by 30 MHz, valued at Rs 7,400 crore as per latest auction prices,” the company added.

The company will be adding 800 / 850 MHz band spectrum, which RCom said was “ideally suited for 4G LTE services.”

“This 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,” RCom said.

Shares of the company closed up 7.60% or 1.25 points to Rs 17.70 per share on BSE today.

RCom said it will gain a total of 20 lakh additional subscribers along with ‘additional annual revenues of around Rs 700 crore.’

Sistema’s total wireless subscribers comprise of over 30 lakh subscribers, 60% of which were reported as active in Telecom Regulatory Authority of India’s latest report dated September 13.

“As a result of the demerger, SSTL will receive a 10% equity stake in the fully diluted equity share capital of RCOM. In addition, RCOM 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. The closure of the transaction is expected by the first week of November 2017,” RCom added.