Reliance Communications and Maxis Communications Berhad ("MCB"), promoters of Aircel Limited announced the merger of their Indian wireless businesses which will be the largest-ever consolidation in the Indian telecom sector.
The merged company will have the second-largest spectrum holding amongst all operators.
"The RCOM-Aircel combination will create a strong operator clearly ranked amongst India's top 4 telcos by customer base and revenues, also ranking amongst the top 3 operators by revenues in 12 important circles", the company said.
Mr. Anil D. Ambani, Chairman, Reliance Group, said " We expect this combination to create substantial long term value for shareholders of both, RCOM and MCB, given the benefits of the wide-ranging spectrum portfolio and significant revenue and cost synergies.
Things to know about the merger
1. MergedCo will be one of India's largest private sector companies, with an asset base of over Rs. 65,000 crore (USD 9.7 billion) and net worth of Rs. 35,000 crore (USD 5.2 billion).
2. The combined entity will enjoy substantial benefits of scale driving significant revenue growth, and capex and opex synergies with an NPV of ~ Rs. 20,000 crore (USD 3 billion).
3. RCOM and MCB will each hold a 50% stake in the merged entity ("MergedCo"), with equal representation on the Board of Directors and all Committees. The Company will be managed by an independent professional team under the supervision of the Board.
4. RCOM's overall debt will reduce by Rs 20,000 crore (USD 3 billion) or over 40% of its total debt, and Aircel's debt will reduce by Rs. 4,000 crore (USD 600 million), upon completion of the transaction in 2017.
5. RCOM will continue to own and operate its high growth businesses in the domestic and global enterprise space, Data Centers, optic fibre and related telecom infrastructure, besides owning valuable real estate.
6. Goldman Sachs, SBI Capital Markets, Standard Chartered Bank, Strategy&, A.T. Kearney, BMR Advisors, PWC, S.R. Batliboi & Co. LLP, EY, KPMG, Khaitan & Co, JSA Law, Kirkland & Ellis, and Slaughter & May are acting as Advisors for the transaction.