Department of Telecom approves demerger of SSTL into RCom

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Department of Telecom approves demerger of SSTL into RCom

The approval could be the much-neeeded breather for RCom, which has been battling debt and faced a failed merger deal with another telecom operator Aircel earlier this month.

The Department of Telecom (DoT) gave the green signal to the merger of Sistema Shyam Teleservices with Reliance Communications, the Anil Ambani-led telecom compnay said today in statement. With this merger deal, the number of mobile operators in the country will come down to ten.

"Reliance Communications Limited (RCOM) has received the Department of Telecommunication's (DoT) approval for the demerger of the wireless business of Sistema Shyam Teleservices Limited (SSTL) into RCom," the telecom firm said in an announcement filed with the BSE.

The approval could be the much-neeeded breather for RCom, which has been battling debt and faced a failed merger deal with another telecom operator Aircel earlier this month. This merger of SSTL will also extend validity of RCom's spectrum portfolio in the highly valued 800 and 850 MHz band in eight major telecom circles across the country - Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP-West and West Bengal - by a period of 12 years from 2021 to 2033. This specific spectrum is best suited for delievering 4G LTE services.

"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 statement said.

RCom has assumed the liability to pay Rs 390 crore per annum for the next eight years to the DoT which is due for specrtrum purchased by SSTL. The transactions related to the deal are expected to close by the first week of November 2017, RCom said.

According to the terms of the deal, all wireless business assets of SSTL will now be owned by RCom. However, MTS, the telecom services brand of SSTL, will continue its operations. Moreover, SSTL will also get 10 per cent stake in RCom as per the terms of the deal.

Meanwhile, shares of RCom on the BSE Sensex rose by 7.6 per cent today on the back if the SSTL merger deal before closing at Rs 17.7 a unit.