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Aircel to be Merged with Reliance Communications to create the country’s 4th-biggest mobile phone operator

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Reliance Communications to be merged with unlisted telecom operator Aircel, thereby marking the first move toward consolidation in the space and creating the country’s fourth-largest phone company in terms of customers and revenue.

About Merger :

The merged entity will also rope in a third partner by diluting about 25% equity to raise around Rs 6,000 crore. Talks have already been initiated with Russia’s Sistema, which already holds 10% in RCom, to also invest in the merged company. Once a third partner enters, Reliance and Aircel will dilute stakes on a proportional basis.

  • In the largest consolidation in the country’s telecom sector, RCom and Aircel’s majority owner, Malaysia’s Maxis Communications Berhad (MCB), announced signing of definitive documents for the merger of their Indian wireless businesses.
  • Both the companies will transfer Rs 14,000 crore of debt each to the joint venture, taking the total debt of the new company to Rs 28,000 crore, excluding Rs 6,000 crore of spectrum payment liability.Reliance
  • RCom had 9.8 per cent market share while Aircel had 8.5% share. Sistema, which RCom earlier merged with, had 0.7% share.
  • “RCom will continue to own and operate its high growth businesses in the domestic and global enterprise space, Data Centres, optic fibre and related telecom infrastructure, besides owning valuable real estate.
  • On 14 September 2016, RCom and Maxis Communications (owners of Aircel) and Maxis Communications announced that they would merge their mobile network operations.
  • The deal is the largest consolidation in Indian telecom history, and will create the third largest mobile network operator in the country by subscribers and by revenue. RCom and Maxis will each hold 50% stake in the merged entity, with equal representation on the board of directors and all committees.
  • RCom will continue to operate in the enterprise segment and data centre businesses as a standalone entity.

About Reliance Communications :

Reliance Communications Ltd.(RCom) is an Indian Internet access and telecommunications company headquartered in Navi Mumbai, India.

  • It provides GSM (Voice, 2G, 3G, 4G) mobile services, fixed line broadband and voice services, DTH depending upon the areas of operation. Reliance Communications is thefourth largest telecom operator in India with 98.70 million subscribers as of June 2016.
  • Established in 2002, it is asubsidiary of Reliance Anil Dhirubhai Ambani Group. Reliance Communication IT Support is provided by Reliance Tech Services and Telecom network is maintained and operated by Ericsson, transmission towers are maintained by its subsidiary Reliance Infratel.
  • Reliance Infocomm laid the largest Optic Fiber Cable network in the country in 2003 to 2005, approximately 135,000 km, and touched almost all top broadband cities with the help of their Franchisee’s – Local Cable Operators (LCO’s).
  • On an average 1900 large LCO’s were connected to the Reliance Infocomm network to provide Voice, Data and Video services known as Triple Play on IPTV platform.
  • After the split of the Telecom business venture between Mukesh Ambani and Anil Ambani, the telecom business was handed over to Anil Ambani, who later christened the company as “Reliance Communications Limited”.
  • In September 2016, RCom announced that it would merge its wireless business with Aircel.

About Aircel :

Aircel is an Indian mobile network operator headquartered in Gurgaon, which offers voice and 2G, 3G and 4G data services. Maxis Communications holds a 74% stake and Sindya Securities and Investments holds the remaining 26%.

  • Aircel was founded by C Sivasankaran and commenced operations in Tamil Nadu in 1999. It is the sixth largest mobile service provider in India with a subscriber base of 83.05 million subscribers as of June 2015.
  • Aircel is a market leader in Tamil Nadu and has considerable presence in Odisha, Assam and North-East