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Reliance Communications To Merge With MTS: Shares Gain
Shares of Reliance Communication rose on Monday after the company said that it will take over Russian conglomerate Sistema's Indian mobile telephony venture that operates under the MTS brand.
The company announced the signing of definitive documents for demerger of Sistema's Indian wireless business, carried on by Sistema Shyam Teleservices Ltd. (SSTL) under the MTS brand, into RCOM.
In addition, RCOM will acquire SSTL's most valuable and superior 800 / 850 MHz band spectrum, ideally suited for 4G LTE services, to complement its own unique nationwide footprint of minimum 5 MHz contiguous 800 / 850 MHz spectrum aggregating 148.75 MHz, the company said in the BSE press release.
As result of the demerger, SSTL will acquire and hold a 10% equity stake in RCOM. In addition, RCom will assume the liability to pay the DoT instalments for SSTL's spectrum, amounting to Rs. 392 crore per annum for the next 10 years, added further.
The Closing of the transaction, expected in the second quarter of 2016, is subject to customary conditions precedent, including inter alia applicable corporate, regulatory and other approvals.
Post Closing of the deal, minority investors of SSTL will be given an option to exchange their shares in SSTL with the pro-rata RCOM shares held by SSTL.
Shares of the company were seen trading at Rs 76.95 on BSE at 12.05 pm IST. It touched an intra-day high of Rs 78.20 during the trade.
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