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Mumbai: Anil Ambani-promoted Reliance Communications Ltd (RCom) has obtained approval from capital markets regulator Securities and Exchange Board of India (Sebi) to spin-off and merge its wireless division with Aircel Ltd and Dishnet Wireless Ltd, as per stock market disclosure.
The proposed merger, which is expected to create India’s third-largest telecom operator by users on completion of the deal, has also received nod from the National Stock Exchange of India Ltd and BSE Ltd.
Following this, RCom has now filed an application with National Company Law Tribunal (NCLT), Mumbai Bench, for its approval, it said in a statement.
Soon after the announcement, shares of RCom rose 2.9% to Rs37.3 apiece and touched an intraday high of Rs38.15 and a low of Rs36.25 a share on the BSE.
However, the scrip erased the early gains and closed up 1.52% at Rs36.80 on BSE.
Mumbai-based RCom has signed a definitive agreement to merge its wireless business with smaller rival Aircel in September last year. The merged entity will combine RCom’s wireless business and Aircel’s operations in India, including all the spectrum held by the two companies.
The approval takes it one step closer to the deal which will allow RCom, which will retain all the non-wireless business, to streamline its divisions and reduce debt by Rs20,000 crore, or roughly 48% of the Rs41,362.1 crore outstanding as of 31 March 2016.
On the other side, Aircel, owned by Maxis Communications Bhd, will see its debt reduce by Rs4,000 crore, upon completion of the transaction in 2017.
Once the deal is completed, which is subject to other necessary approvals, Both RCom and Maxis Communications will hold 50% each in the merged entity and have equal representation on the board and committees.
The merged company’s subscribers will have access to nationwide 4G LTE services in the sub-1GHz band, under RCom’s existing nationwide spectrum sharing and intra-circle roaming arrangements with Reliance Jio Infocomm Ltd.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.