RCom and Aircel merge its mobile biz, new entity to be announced

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In a major development, Reliance Communications (RCom) has announced its merger with Aircel, ending months of speculation surrounding the pact.

The merger of Anil Ambani led Reliance Communications and Aircel will create India’s third largest telecommunications company in terms of subscriber count.

Aircel, owned by Malaysian Telecom giant Maxis Communications (MCB), will have 50% stake in the new entity which will operate under a new name.

Presumed to be the largest ever consolidation in Indian telecom sector, the merger will reduce RCom’s debt by Rs 20,000 crore, which is over 40 per cent of its total debt, and also lower Aircel’s debt by Rs 4,000 crore.

“We expect this combination to create substantial long term value for shareholders of both, RCom and MCB, given the benefits of the wide-ranging spectrum portfolio and significant revenue and cost synergies,” Anil Ambani, Chairman of Reliance Group, said in a statement.

The merged company will reportedly be one of India’s largest private sector firm with an asset of Rs 65,000 crore (USD 9.7 billion) and net worth of Rs 35,000 crore (USD 5.2 billion).

On the service front, subscribers of the brand will have access to nationwide 4G LTE services under Reliance Communication’s existing nation-wide spectrum sharing.

It will further bring improved services and new products across all 22 telecom circles.

Commenting on the merger, Maxis Communications said the deal underlined the company’s belief in long term growth potential of the country and the Indian telecom sector. Since acquiring Aircel in 2006, MCB had invested over Rs 35,000 crore (USD 5.2 billion) to expand and modernize the offerings.

Reliance Communications boasts a subscriber base of 110 million, while Aircel follows with 84 million. The new company will be managed by an independent team under the supervision of the Board.

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