Days After Jio Launch, Anil Ambani’s RCom Announces Merger Of Mobile Business With Aircel

Billionaire Anil Ambani-controlled Reliance Communications and Aircel today announced a merger of their wireless telecom businesses, which would create India’s third biggest telecom operator in terms of subscriber base. The merger of Reliance Communications and Aircel also comes in the backdrop of the launch of Reliance Jio, which is controlled by Anil’s elder brother and India’s richest man Mukesh Ambani.

Analysts expect a consolidation in the telecom sector in the wake of intensifying competition after Jio’s aggressive launch.

Reliance Communications is India’s fourth biggest telecom operator in terms of wireless subscriber base with 9.87 crore customers while Aircel ranks sixth with 8.8 crore subscribers. The combined business would surpass Idea as number three in the sector. Bharti Airtel is the current market leader, followed by Vodafone.
The merger deal with Aircel, majority owned by Malaysia’s Maxis Communications, will expand Reliance Communications’ access to 3G airwaves and add 4G capacity to its portfolio.

Reliance Communications and Maxis Communications of Malaysia will hold 50 per cent stake each in the combined entity with equal representation on board and committees.

The new entity will hold second largest spectrum portfolio amongst all operators in India across the 850, 900, 1800 and 2,100 MHz bands. The merged entity will have assets of Rs.65,000 crore and will be ranked among top corporates in India.

In December last year, the two firms announced entering into 90-day ‘exclusivity period’ for the merger deal that will exclude RCom’s tower and optical fibre assets. The talks were later extended twice.

India’s telecoms market is the world’s second biggest behind China in terms of mobile phone subscriptions, but tough competition means lower margins for carriers.

Reliance Communications had also last year agreed to buy Russian conglomerate Sistema’s Indian mobile phone business in an all-stock deal.

Reliance Communications also has a pact with Reliance Jio to share some airwaves.  (With agency inputs)