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RCom receives approval from Sebi for merger with Aircel

Following the leads of merger between Reliance Communications and Aircel, the two companies have finally received an approval from Securities and Exchange Board of India (Sebi). The granted permit allows Anil-Ambani promoted Reliance communications to merge and spin-off the Mumbai-based rival Aircel within its business. Along with Aircel, approval for the merger of Dishnet Wireless has also been granted to the company.

The merger will establish India’s third largest telecom company in terms of users, post the conclusion of proceedings. The deal has also received a nod from the National Stock Exchange of India Ltd and BSE Ltd. to move forward with the alliance. The only left permit remains to be of National Company Law Tribunal (NCLT), Mumbai Bench; for which an application from RCom has been already issued.

The agreement declaring a future merger was signed by both the parties back in September. Post the merger, the network spectrum of Aircel coupled with its operations in India will combine with RCom’s wireless business. The announcement of incorporation of merged an entity rose the prices for RCom shares by 2.9% bringing to Rs37.3/share. The stakeholders even witnessed as high as Rs38.15 and a low of Rs36.25 a share on the BSE.

Under the deal, the debt for Reliance Communications will lower down by 48% (estimated at Rs20,000 crore)from the present of Rs41,362.1 crore outstanding as of 31 March 2016. The debt for Maxis Communications Bhd owned Aircel will also witness a reduction in debt by Rs4,000 crore, once the deal is completed. It will also allow RCom to maintain all of its existing non-wireless business and streamline divisions.

Both Reliance Communications and Maxis Communications Bhd will be partners of 50% in the merged entity and will be granted an equal board representation. The deal is yet to bypass various necessary approvals prior to commencing operations. With the initiation of operations for the merged entity, it will offer nationwide 4G LTE services in the sub-1GHz band, under RCom’s existing nationwide spectrum sharing and intra-circle roaming arrangements, as reported by LiveMint.

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RCom receives approval from Sebi for merger with Aircel

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