RELIANCE COMMUNICATIONS ANNOUNCES FIRST CONSOLIDATION IN INDIAN TELECOM SECTOR HIGHLIGHTS


  1. Acquiring 3.75 MHz of highly valuable spectrum in 850 MHZ band in very important circles – Delhi, Gujarat, Tamilnadu, Karnataka, Kerala, UP (West), Kolkata, West Bengal and Rajasthan.
  2. Spectrum valid for 18 years till 2033 (excluding Rajasthan till 2018) – extends validity of RCOM spectrum by 12 long years in the above circles (excl. Rajasthan).
  3. Largest holding of 850 MHz band spectrum – most suited for 4G LTE, which is the future – aggregating 148.75 MHz.
  4. Acquisition of 9 million customers.
  5. Revenue of approx. Rs. 1,500 crore per annum.
  6. Significant capex and opex synergies
  7. SSTL operational team has demonstrated strengths in data market in India.
  8. Zero cash outgo – acquisition of valuable spectrum and business funded entirely by stock, and takeover of DoT instalments of Rs. 392 crore per annum only.
  9. Eliminates need of future cash outgo from RCOM for acquiring 850 MHz spectrum in 8 circles in 2021, on expiry of its own spectrum – based on auction price of 2015 and accreted interest policy of DoT for future auctions, this would have amounted to minimum outflow of Rs. 15,000 crore in 2021 which will now not be required!
  10. SSTL is paying off all its existing debt on its own prior to Closing.
  11. No Board seats, no veto rights to SSTL – continuity of management.
  12. Spectrum continuity risk for RCOM eliminated for minimum 15 years in 18 out of 22 circles – between 850, 900, 1800 and 2100 – balance 4 circles AP MH HR and UP(E) also still have 6 years to go.

 All in all, highly value creating proposition for RCOM and its stakeholders.

November 2, 2015: Reliance Communications Ltd. (RCOM), one of India’s leading fully-integrated telecommunications service providers, and Sistema JSFC, a publicly-traded diversified holding company in Russia and the CIS, today announced the signing of definitive documents for demerger of Sistema’s Indian wireless business, carried on by Sistema Shyam Teleservices Ltd. (SSTL) under the MTS brand, into RCOM.

RCOM will acquire approx. 9 million customers and approx. 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% 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.

Prior to Closing of the Transaction, SSTL intends to pay off its existing debt. An appropriate payment / earn-out mechanism has been agreed in relation to disputed spectrum contiguity charges claimed by DoT.

Mr.Gurdeep Singh, President & Chief Executive Officer, Consumer BusinessReliance Communications, said, “We are delighted to welcome Sistema Shyam TeleServices Ltd. as a valued shareholder and partner in Reliance Communications Ltd.

The combination of our wireless businesses, through the demerger of SSTL wireless business into RCOM for stock consideration, will generate significant capex and opex synergies for mutual benefit.

 

The Indian data market is witnessing explosive growth, and SSTL’s proven strengths in that space will further enhance RCOM’s capabilities in delivering a superior experience to our valued customers. We are pleased that the addition of SSTL’s valuable spectrum holdings in the 800 – 850 MHz band will strengthen RCOM’s spectrum portfolio, and extend our ability to provide world class 4G LTE services to our customers in 8 important circles in the country till the year 2033, he added.”

 

Mr Mikhail Shamolin, President and CEO of Sistema, said, “The merger of SSTLand RCOM’s telecom businesses is a milestone event. Despite the numerouschallenges the sector faced in recent years, the combination of two leading data serviceproviders is a clear sign of progress for the Indian telecom industry. We are confident that SSTL’s entry into the equity capital of RCOM as a strategic investor will strengthen the competitive position of the combined company and provide subscribers with superior experience by fast- tracking the growth of LTE technology in India.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s