Indian carriers aim to complete the deal in Q2
Reliance Communications confirmed its shareholders have approved a proposal to acquire local telecom firm Sistema Shyam Teleservices. The deal has been already authorized by the Competition Commission of India, Rajasthan High Court, Bombay High Court and the Securities and Exchange Board of India.
SSTL shareholders are set to hold a meeting March 18 to vote on the deal. If approved, Reliance will approach the Department of Telecom for final procedures. The deal is valued at around $ 690 million and is expected to close in the second quarter of this year.
Under terms of the agreement, SSTL will hold a 10% stake in Reliance Communications. Russian company AFK Sistema currently holds a 56.68% stake in SSTL, the Russian government owns 17.14%, India’s Shyam Group controls 23.98%, while the rest is owned by minority investors.
“I expect that SSTL will approve the merger,” Shiv Putcha, associate director for IDC Asia Pacific, told RCR Wireless News. “SSTL has not been able to scale with their CDMA assets, but they do hold valuable spectrum in the 800 MHz band. This can be used to upgrade to LTE and will be the key to the proposed merger. Reliance Communications brings 2G and 3G network assets to the mix.”
Putcha said Reliance Communications is currently in negotiations to merge its operations with rival operator Aircel. “The combined RCOM-Aircel-SSTL entity would probably move up to the third of fourth position in the Indian telecom market and have significant presence with valuable 4G spectrum.”
At the end of September 2015, Reliance had 110.4 million subscribers, with a market share of more than 11%, according to official figures.
Putcha said the Indian market still has room for further consolidation in the future. “While the market is definitely healthier than previous years, I do believe there is still room for consolidation,” he said. “Discounting the state-owned BSNL entity, I think we will be down to five players in the near future.”