Reliance Comm buys Sistema unit in share swap deal

MUMBAI (Reuters) - Telecoms operator Reliance Communications Ltd has agreed to buy Russian conglomerate Sistema's Indian mobile phone business through a stock swap, the first major deal in the crowded and indebted telecoms industry.

RCom, after months of talks, said on Monday that Sistema would take a 10 percent equity stake in RCom, valued at $290 million at current market prices.

In exchange, RCom would acquire all the equity of Sistema Shyam Teleservices, which has less than one percent market share, with some 9 million customers and 15 billion rupees ($229 million) in annual revenue.

RCom also said it would pay what SSTL owes for its broadband specturm, which works out to 3.9 billion rupees per year for the next 10 years.

Consolidation in India's crowded telecoms sector is not common, partly due to complicated government rules on mergers.

The government's latest round of spectrum auctions, concluded earlier this year, left companies more financially stretched, and this is expected to spur more deals.

SSTL said the company "intends to pay off its existing debt" before the transaction closed.

(Reporting by Nivedita Bhattacharjee in Mumbai; Editing by Clara Ferreira Marques)