Reliance Communication (RCom) has received an approval from the Department of Telecommunication (DoT) for demerger of the wireless business of Sistema Shyam Teleservices (SSTL) into RCom. 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. This will result in extension of the validity of RCom’s spectrum portfolio in the 800 / 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.
As a result of the demerger, SSTL will receive a 10% equity stake in the fully diluted equity share capital of RCom. In addition, RCom will assume the liability to pay the DoT installments for SSTL’s spectrum, amounting to Rs 390 crore per annum for the next 8 years. The closure of the transaction is expected by the first week of November 2017.
