Reliance and Aircel will both own a 50% stake in creatively titled new entity called MergedCo
Indian telecommunications operator Reliance Communications and rival mobile operator Aircel announced the signing of definitive documents for the merger of their Indian wireless businesses, which represents the largest consolidation in the Indian telecom sector.
Reliance and Aircel will each hold a 50% stake in the new entity, MergedCo, with equal representation on the board of directors and all committees.
MergedCo will have the second-largest spectrum holding amongst all operators, aggregating 448 megahertz across the 850 MHz, 900 MHz, 1800 MHz and 2100 GHz bands.
“We expect this combination to create substantial long-term value for shareholders of both Reliance Communications and Aircel given the benefits of the wide-ranging spectrum portfolio and significant revenue and cost synergies,” Reliance Group’s chairman, Anil Ambani, said.
Maxis, the parent company of Aircel, said the company has invested over $5.2 billion in the mobile operator since acquiring it in 2006, marking one of the largest foreign investments in India.
Reliance’s data center, fiber and related infrastructure operations will remain separate following the merger.
MergedCo will be one of India’s largest private-sector companies, with an asset base of over 650 billion rupees ($9.7 billion) and a net worth of 350 billion rupees.
MergedCo will provide services through 2G, 3G and 4G network infrastructure across 22 telecom circles in India. The two companies also said that the transaction is subject to shareholder and regulatory approvals.
Reliance Communications’ network infrastructure currently covers over 21,000 cities and towns and over 400,000 villages across India. The company also owns and operates a next-generation internet protocol-enabled connectivity infrastructure, comprising over 280,000 kilometers of fiber optic cable systems in India, the U.S., Europe, the Middle East and the Asia-Pacific region. Aircel currently offers mobile services in 12 telecom circles through 2G and 3G technology.
