Reliance Communications (RCOM) today announced that it will acquire Sistema’s Indian wireless business, carried on by Sistema Shyam Teleservices Ltd. (SSTL) under the MTS brand funded entirely by stock. It will acquire approx. 9 million customers and approximately Rs. 1,500 crore of annual revenues by virtue of the transaction, said the company.
It will also acquire 800 / 850 MHz band spectrum that is suitable 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 which include Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West) and West Bengal by a period of 12 years from 2021 till 2033, said Reliance.
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. Russian tycoon Vladimir Evtushenkov, Chairman of the Board of Sistema JSFC currently holds 56.68% stake in SSTL, while Russian government owns 17.14 per cent interest. Shyam Group has 23.98% stake and the rest is owned by small investors.
Gurdeep Singh, President & Chief Executive Officer, Consumer Business, Reliance 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.
Mikhail Shamolin, President and CEO of Sistema, said:
The merger of SSTL and RCOM’s telecom businesses is a milestone event. Despite the numerous challenges the sector faced in recent years, the combination of two leading data service providers 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.