RCom to sign merger pact with Aircel shareholders soon

According to people close to the deal, the merger will possibly be announced early July and the contours will remain similar to what was disclosed earlier

Reliance Communications (RCom) on Thursday said it soon expects to sign a binding definitive documentation with Aircel shareholders namely Maxis Communications Berhad and Sindya Securities and Investments for the combination of their wireless business. According to sources, the merger might be announced in early July and the contours will remain similar as disclosed earlier. On May 22, both the companies had decided to extend merger talks with each other by a month, which was later extended by a couple of weeks.

The company in a statement said it expects to sign binding definitive documentation and announce the proposed transaction for the combination of its Indian wireless business and Aircel very shortly.

The statement though added that any transaction will be subject to regulatory, shareholders’ and other third party approvals and hence, there is no certainty that any transaction will result.

RCom had last year announced the three-way merger with Aircel and MTS, to create a challenger to number 3 player Idea Cellular.

The combined entity will have 120-150 million customers and a revenue market share of about 12 per cent.

The combo will hold about 19.3 per cent of total spectrum, having airwaves in 800 MHz, 900 MHz, 1800 MHz, 2100 Mhz, and 2300 MHz bands.

Although the talks about merger with Aircel has been extended for a few times but it is learnt that lenders are putting their weight behind the deal and the State Bank of India is leading this consortium of lenders.

RCom and Aircel will now transfer Rs 14,000 crore debt each into the new entity, which will have combined revenues of around Rs 25,000 crore. Earlier, both companies were set to transfer only Rs 10,000 crore each.

MTS has already merged with RCom and cease to exist. After the merger with Aircel, the combined entity will have 50 per cent stake each of Aircel and RCom.