RCom, Aircel combined entity to have ‘Rs 25,000 crore business’

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NEW DELHI (TIP): The Reliance Communications and Aircel merger is likely to be announced within 15 days, after months of extended negotiations, and the new entity is expected to have Rs 25,000 crore business from the first day of its operation.

“The deal is almost in final stage. Synergies between the two companies have been worked. The merger should be announced within 10-15 days. The resultant entity will have revenue of about Rs 25,000 crore from day 1,” said a source.

In a BSE filing on Thursday, RCom said that Maxis Communications Berhad and Sindya Securities and Investments, the shareholders of Aircel, expect to sign binding definitive documentation and announce the proposed transaction for the combination of the Indian wireless business very shortly.

Last month, the two firms had decided to extend by 30 days the discussion period for their possible merger.

This was for the second time the companies had extended the discussion period for the merger. Previously, on March 22, they had extended the merger talks by 60 days.

Last December, the RCom and Aircel announced that they have entered 90-day ‘exclusivity period’ for the deal that will exclude RCom’s tower and optical fibre assets for which a separate sale process is ongoing, the company said in a statement.

The RCom-Aircel merged entity is estimated have EBIDTA (cash flow) Rs 7,000 crore and finance cost about Rs 3,000 crore, the source said.

“RCom and Aircel have had nil free cash flow since long time but the resultant entity is being structured in a manner to have Rs 4,000 crore free cash flow which it can use for investments in network,” the source said.

RCom’s net debt at the end of 2015-16 was Rs 41,362.1 crore. Debt of Aircel could not be ascertain. At the end of last fiscal, RCom’s consolidated revenue stood at around Rs 22,000 crore. RCom and Aircel talks, if successful, would lead to a combined entity holding 19.3 per cent of the total spectrum allocated to the industry — highest in the country by an entity.

The proposed combined entity will hold spectrum across all allocated bands — 800Mhz, 900Mhz, 1,800Mhz, 2,100Mhz and 2,300 MHz — for 2G, 3G and 4G services.

Shares of RCom closed at Rs 49.7 a unit, up by 4.19 per, on BSE.


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