Reliance communications (RCom) achieved another milestone by receiving a go-ahead nod officially from the Competition Commission of India for acquiring the MTS brand.
The company is actually a Russian conglomerate Sistema’s Indian telecom unit, Sistema Shyam Teleservices Ltd (SSTL) that operates under the MTS brand. SSTL offers mobile telephony services under the MTS brand across nine telecom circles in the country.
The RCom’s statement in a BSE filing comes as “We wish to inform you that the Competition Commission of India (CCI) has approved transfer of telecommunications undertaking of Sistema Shyam Teleservices Ltd to the company,” India’s fourth-largest telecom operator announced the acquisition in an all-stock deal that will create an operator with 118 million subscribers. Moreover, SSTL will hold about 10 per cent stake in RCom and pay off its existing debt before closing the deal.
How the Acquisition will open doors for RCom
Sistema ventured into the Indian telecom market in 2007 after buying 10 percent stake in Shyam Telelink paying $11.4 million (roughly Rs. 78.1 crores).
The stake was raised subsequently. The merger will help RCom in competing with the existing players and moreover the acquisition of MTS will also consolidate its position ahead of Mukesh Ambani’s foray into the sector with 4G services under the Reliance Jio brand later this year.
The deal will give RCom access to spectrum or airwaves in the 850MHz band that can be used for 4G services which it plans to start by the year-end and it will also be able to extend the validity of its licence by 12 years in eight high revenue-generating circles of Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West), and West Bengal. Gurdeep Singh, President & Chief Executive Officer, Consumer Business, RCom, said, ‘Once the deal is approved by the government, RCom will be able to future-proof almost half of the existing telecom circles, where most of its licences are expiring in the next few years.’