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Anil Ambani led-RCom signs deal with Russia’s Sistema to establish joint telecom venture

Anil Ambani

India’s Anil Ambani led-Reliance Communications (RCom) and Russia’s Sistema Shyam TeleServices Ltd (SSTL) have signed an agreement to establish a joint telecommunications company.

RCom has also entered in talks to merge its wireless business with smaller rival Aircel to create the India’s second-biggest mobile phone operator by user numbers. RCom is India’s fourth-biggest telecom operator with almost 110 million customers.

According agency report, Sistema’s principal owner Vladimir Yevtushenkov said that his company has signed an agreement with Anil Ambani’s Reliance Group to establish a joint venture.

Sistema had 8.36 million users in India.

The two companies signed the agreement after Prime Minister Narendra Modi attended the CEO Forum in Moscow, during his two-day bilateral visit to the country for the 16th Annual Summit.

The transaction implies that the telecom business is spun out from SSTL and merged with the business of Reliance Communications. SSTL share in the capital of the combined company will be 10 percent.

The market capitalisation of Reliance is about USD 2.5 billion (approximately Rs 16,560 crore), so this share is estimated at USD 250 million (approximately Rs 1,656 crore).The transaction is expected to be closed in the second quarter of 2016.

The combination of RCom, Aircel, MTS wireless businesses will hold 19.3 percent of the total spectrum allocated to the industry – the highest in the country by an entity.

On November 2, Sistema had signed binding documents on the merger of its Indian telecom business Sistema Shyam TeleServices Ltd (SSTL) and Reliance Communications, which is one of the largest telecom operators in India.

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