The proposed merger between Reliance Communications (RCom) and Sistema Shyam TeleServices Limited (SSTL) has received the green light from India’s Department of Telecommunications (DoT).
The DoT’s approval was the final hurdle for the INR50 billion ($766 million) to close. The agreement will see RCom significantly expand its spectrum portfolio, with the validity period for its spectrum licences in eight key regions extending to 2033. Based on India’s most recent auction prices, RCom’s new spectrum has a value of around INR190 billion.
SSTL, which operates as MTS, holds a 3.75MHz block in the highly sought-after 850MHz band which it acquired in 2013. Once the deal has closed RCom will be obliged to pay the government INR4 billion annually for the next ten years as a licensing fee for this spectrum.
RCom is India’s sixth largest operator, with its 80 million connections giving it a market share of slightly less than 7%. SSTL meanwhile had 3.8 million mobile connections at the end of Q3 2017.
The deal with SSTL was not the only merger that RCom was negotiating, but it recently dropped a proposed tie-up with Aircel due to “inordinate delays caused by legal and regulatory uncertainties”. The operators had been discussing a potential merger of their wireless operations since December 2015.
