Sistema Shyam Teleservices – Reliance Communications Merger Gets Green Signal from DoT

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Sistema-Shyam-Teleservices-Reliance-Communications-Merger

Sistema Shyam Teleservices – Reliance Communications Merger: A lot has been going in Indian telecommunication services with all the mergers. After entrance of Reliance Jio, there has been a disrupt that was created in telecom industry. Now, Reliance Communications has received the approval from Department of Telecommunications (DoT) for the merger of wireless business of Sistema Shyam Teleservices Ltd (SSTL) with itself.

“Reliance Communications Limited (RCOM) has received the Department of Telecommunications (DoT) approval for the demerger of the wireless business of Sistema Shyam Teleservices Limited (SSTL) into RCom,” the Anil-Ambani led telecom firm said in a statement. This will bring down the number of players in the Telecom department to ten. The deal was cleared by the DoT on 20 October.

DoT Approves Sistema Shyam Teleservices – Reliance Communications Merger

The statement from RCom read, With this, Rcom will acquire approximately 2 million customers and additional annual revenues of around Rs 700 crore. In addition, RCom will acquire 30 MHz of the most valuable and superior 800/850 MHz band spectrum, ideally suited for 4G LTE services, to complement its own unique nationwide footprint. The nod brings some relief for the debt-ridden RCom after its merger deal with another telecom operator Aircel collapsed early this month.

This merger will extend the RComs spectrum portfolio in the 800 and 850 MHz band in eight important circles — Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal — by a period of 12 years from 2021 to 2033. SSTL will receive a 10% equity stake in RCom. The Anil Ambani-promoted firm will have to pay Rs 390 crore per annum for next eight years to DoT as spectrum liability for acquiring the SSTL spectrum.

An equity of 10% in RCom is valued at around Rs 650 crore. Apart from 10% equity, SSTL would not get any Board seat or veto rights. The transactions related to the deal are expected to close by the first week of November 2017.

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