Reliance Communications (RCom), Sistema (MTS) and Aircel have begun the initial talks for the three way merger that might see the emergence of the largest telco in India. The very first phase of this broad deal might see MTS merge with RCom via a share-swap arrangement. The discussions regarding the same are at a complex stage. The second phase will engage a deal with Aircel. The discussions regarding the same are at the beginning stage and dependent on both RCom and Maxis owned company minimizing their debt levels. This information was revealed by a person involved with the deal directly.
The person stated that both the companies plan for asset sales to minimize debt. RCom is claimed to sell stakes in its overseas and tower businesses besides monetizing its land holdings to slice its debt of over Rs 38,000 crore. Aircel holds talks to sell the 4G airwaves to the market dominator Bharti Airtel. It uses the proceeds to minimize its Rs 20,000 crore debt.
Another source familiar with the matter stated that RCom and Aircel are exploring to share and trade pacts for five of its circles. In these circles, RCom did not win back the 900 MHz airwaves in the latest round of auctions. It was stated that RCom’s top priority would be to trade and share the airwaves. Maxis that owns 74 percent of Aircel that makes losses will bring its infrastructure to the deal.
Both RCom as well as Aircel are saddled with their high debt levels that must be solved ahead of the merger or at least be considered, stated the bankers aware of the matter. Aircel has a debt of around Rs 20,000 crore. On the other hand, RCom reported a total debt of Rs 38,595 crore.
Aircel is alleged to have almost sealed the deal to sell the 2300 MHz 4G airwaves to Bharti Airtel to a price of Rs 4,000 crore.
