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IN Science & Technology ON 14 Sep, 2016
Reliance Communications (RCOM) & Maxis Communications Berhad who promotes the Aircel just signed definitive documents for merging their businesses. This deal was in the pipeline for many months now, but it is finally official.
"On consummation of the merger, RCom and Maxis Communications are committed to additional equity infusion into the merged company to further strengthen the balance sheet, fund future growth plans, and enhance financial flexibility. Both parties are already in talks with leading international investors in this regard," RCom said in a statement.
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"We expect this combination to create substantial long-term value for shareholders of both ... given the benefits of the wide-ranging spectrum portfolio and significant revenue and cost synergies," Reliance Communications Chairman, Anil Ambani said.
The 'RCOM-Aircel' combination will create a high operator apparently ranked amongst India's top 4 telecoms by customer base and revenues. According to a company statement, the merged company will have the second-largest spectrum against others with '448 MHz across the 850, 900, 1800 and 2100 MHz bands.'
According to Maxis Communications Berhad, this deal further reinforces MCB's commitment to India. MCB has invested more than Rs 35,000 crore ($ 5.2 billion) into Aircel, making this one of the highest foreign investments in the Indian telecom sector.
"This since acquiring Aircel in 2006, the magnitude of this investment, and the further equity commitment in support of this deal, are underpinned by MCB's belief in the long-term growth potential of both India and the Indian telecom sector," via an MCB statement.
This merged entity will be one of the India's largest private sector companies, with an asset base of over Rs. 65,000 crores (Approx $9.7 billion) and net worth of Rs. 35,000 crore (approx $5.2 billion).
"The merged entity leader in 12 cycles will be a strong challenger to Kumar Mangalam Birla-led Idea Cellular, which is getting squeezed from both ends. With the launch of Reliance Jio and this merger," said a leading telecom analyst.
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