Reliance Communications (RCom) on Monday announced the acquisition of Russian conglomerate Sistema’s Indian telecom unit in an all-stock deal that will create an operator with 118 million subscribers. (Express Photo for representation only)
Reliance Communications (RCom) share price jumped as much as 4 per cent on BSE after the company informed stock exchanges that the telecommunications service providers on Monday announced the signing of definitive documents for demerger of Sistema’s Indian wireless business, carried on by Sistema Shyam Teleservices (SSTL) under the MTS brand, into RCOM.
At 1.12 pm, the share price of Reliance Communications was up 2.06 per cent at Rs 76.80. The scrip opened at Rs 76 and had touched a high and low of Rs 78.20 and Rs 75.50, respectively, in trade so far. Sensex was down 0.85 per cent, or 225.91 points, at 26,430.92.
Under the agreement, RCom will acquire around 9 million customers and around Rs 1,500 crore of annual revenues by virtue of the transaction. In addition, RCom will acquire SSTL’s most valuable and superior 800 / 850 MHz band spectrum, ideally suited for 4G LTE services, to complement its own unique nationwide footprint of minimum 5 MHz contiguous 800 / 850 MHz spectrum aggregating 148.75 MHz.
This will extend the validity of RCOM’s spectrum in 800 / 850 MHz band in 8 important circles by a period of 12 years from 2021 till 2033 (Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West) and West Bengal).
As result of the demerger, SSTL will acquire and hold a 10 per cent equity stake in RCom. In addition, RCom will assume the liability to pay the DoT instalments for SSTL’s spectrum, amounting to Rs 392 crore per annum for the next 10 years.
Post Closing of the deal, minority investors of SSTL will be given an option to exchange their shares in SSTL with the pro-rata RCOM shares held by SSTL.
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