Reliance Communications (RCom) is expecting to close its tower assets sale

deal with private equity firms within the next two weeks. Speaking at an
analysts conference call on Monday, Vinod Sawhny, chief executive officer of
RCom, said, We expect to close the deal in two weeks.

Earlier this month, RCom had extended the deadline to complete

its tower sale agreements with private equity firms TPG Capital and Tillman
Global Holdings till the end of this month. Sources said the companies could
not agree upon lease agreements as RCom will continue to use the towers
after the sale and that is why the talks were extended.

The company on Monday also raised its capital expenditure (capex) guidance
for the current financial year to Rs 4,000 crore, up from Rs 3,000 crore,
according to earlier announcement. It said a similar amount would be spent in
the next financial year also.

RCom will continue to lead consolidations in the telecom sector and there
would be capex and opex synergies. Also, we are raising our capex guidance
to Rs 4,000 crore for this financial year and next year to strengthen our 3G
network, Gurdeep Singh, chief executive officer (consumer business), said
during the conference call.

The telecom firm has already received approvals from stock exchanges to go
ahead with its merger plan with Russian telecom player MTS and is awaiting
other formalities to close the deal. Its talks with Aircel to merge the entities
has a deadline of March 22 and it expects to complete the transaction before
that.

The flagship company of Reliance Group, led by Anil Ambani, has signed
pacts with Reliance Jio to sell its 800-MHz licence in nine circles. Both groups
have agreed to use each others' towers and optical fibre networks to support
each others' consumers by signing intra-circle roaming pacts. Both will offer
fourth-generation services by sharing each others' resources, as part of the
deal.

The debt-ridden firm is doing everything it can to pare its huge debt of nearly
Rs 40,000 crore. Apart from tower sale, the company has started monetising
its real estate assets. Earlier, it had announced to sell its flats in Navi Mumbai
for Rs 330 crore. It also plans to sell nearly four acres land in central Delhi to
reduce its debt burden, company officials said on Monday.
The worlds second-largest telecom operator, Vodafone, facing taxation
issues in India, on Thursday said it was difficult for foreign companies to do
business in the country because of slower government clearances.

Vodafone India Chief Executive & Managing Director Marten Pieters said the
firm had in December last year sought governments approval to bring in
funds from the parent company for buying airwaves but the clearance was still
awaited.

Yes, it is difficult to do business in India. That is the perception of

foreign companies in general, not only telecom ones, said, Pieters at
the Economist India Summit here.

The British telco is facing a tax liability of Rs 11,200 crore, along with interest,
on its 2007 acquisition of Hong Kong-based Hutchison Whampoas stake in
Indias Hutchison Essar. He, however, added the process for doing business
in India can be made much easier, smoother by just removing a few things.

On spectrum auctions, due in February, and raising equity for it, Pieters said:
I have no answer, I got to know last week that the officer dealing with the file
had retired. He said Indias telecom industry was in a mess, mainly because
of the thinking that the more the competition, the better it was, Pieters said.

He said industry structure was a government responsibility and he had seen

very little action to change this system.

The telecom industry, if you look at it from an international perspective, is a

mess in India. It seems to come from this concept that has been developed in
the past, that the more the competition, the better, Pieters said.

The industry structure is a problem of the government... spectrum, our raw

material, is in limited supply, so if you get too many players, you get this
problem where nobody has enough spectrum, he said.
Pieters said he had raised the point about industry structure during his
discussions with the government in the past as well, but was told that this was
a result of competitive environment.

He gave Chinas example, where there were only three players in the space.
These operators were all very profitable, offered low rates and had a far better
infrastructure, he added. Last year, China invested $50 billion in its networks,
while the figure in India was $5 billion, he said.

This industry structure is the governments responsibility. I have seen very

little action (in India) to change that, to take that responsibility, Pieters said.

Asked if there was a change in perspective since the new government took
over, he said: In India, the sentiment can change overnight. But that does not
mean everything can structurally change overnight... it can hopefully be after
12-18 months.

Pieters said the information & communication technology initiatives

announced by the government were not new and the National Telecom Policy,
2012, was full of such concepts.

All those are great ambitions... the problem is about getting there. I see that
in our industry the thinking about getting there is simply not there, he said.
NEW DELHI: India's ambitious Digital India programme could get derailed due to the financial
challenges faced by telcos, apart from the low quantities of spectrum deployed for commercial
use and the absence of a road map for releasing more airwaves, telcos and experts say.

Mobile phone operators in India face multiple challenges lowest spectrum holdings in the
world and that too fragmented as it's divided among 7-13 operators in a circle, apart from being
non-continuous, which is ..

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Defence

Indore: Reliance Group chairman Anil Ambani on Saturday said with 90% of
defence equipment being imported, there is huge opportunity for domestic
manufacturing and his group has identified two locations in Madhya Pradesh for
setting up production facilities.

Ambani said India has relaxed foreign direct investment (FDI) norms in the
defence sector and hoped that Madhya Pradesh gets the benefits of the same. I
am confident that Madhya Pradesh will move ahead, and under Prime Minister
Narendra Modi we have seen opening on defence sector. Reliance Group is
participating in that, we hope that for Make in India programme, Skill India
programme, we will invest in the defence sector in Madhya Pradesh, he said.

Speaking at the Global Investors Summit, Ambani said his group has identified
two locationsone in Pithampur and another in Bhopalfor defence
manufacturing. Defence is a key priority (of government). 90 per cent of our
equipment is imported and there is a huge huge opportunity for us to do things
in India, he said.
Talking about the groups investment in the state, Ambani said, We have one
of our largest investments in MP...we have investment of nearly USD 6 billion.
The group has set up a 4,000 MW power plant in MP and it makes the state
competitive in terms of its overall energy cost to attract future investments
specially in capital intensive industries.

Fiscally it helped Madhya Pradesh saving about Rs 5,000 crores a year and
over Rs 1.25 lakh crore will be the saving for MP because of the Sasan 4,000
MW plant, he said,
According to sources, while Bharat Electronics,
Samtel and other defence companies will get a
piece of the Rafale offset money, it is Reliance
Defence that will execute a decent portion of the
Rs. 30,000 crore that will flow in.

A Rafale fighter jet. Credit: Reuters

New Delhi: Anil Ambani-led Reliance Defence has been chosen as

Dassault Aviations Indian strategic partner and will form a joint
venture that will be a key player in the execution of offset obligations
that arise from the recent purchase of 36 Rafale fighter jets.

The 36 fighter jets that were acquired by India recently were

purchased for almost 8 billion euros and came with a 50% offset
clause: this offset clause ensures that 50% of the deals amount needs
to be invested into the Indian defence ecosystem.
The joint venture announced today is a major feather in the cap of
Reliance Defence: Although it was formed over a year ago with the
acquisition of Pipavav Defence, the Dassault JV will represent its first,
official and major defence order.

Reliance Defence, according to a press release issued, will be one of

the primary Indian partners that will develop major Indian programs
with high levels of technology transfer as a result of the Rafale offset
clause. The joint venture, according to Reliance executives, will
indirectly benefit the entire aerospace sector.

The proposed strategic partnership between Dassault and Reliance

will also focus on promoting research and development projects under
the IDDM program (Indigenously Designed, Developed and
Manufactured), a new initiative of Indias Defence Minister Manohar
Parrikar, the statement read.

Ambani, in a statement, announced that this was a transformational

moment for the Indian aerospace sector and for Reliance
Infrastructures subsidiary Reliance Aerospace.

The Wire had earlier reported how in early 2015, three companies
were in talks with Dassault and the Indian government for possible co-
production opportunities that could have arisen from the Rafale deal.
The three companies were Bharat Electronics, Noida-based Samtel
and Reliance Defence Systems.

Not just Reliance

According to sources, while Bharat Electronics and Samtel and other

defence companies will also a piece of the offset money, it is Reliance
Defence that will execute a decent portion of the Rs. 20,000 Rs.
30,000 crore that will flow in as a result of the Rafale deal.
This is obviously a great step forward. However, the four companies
that have offset obligations are Dassault, Thales, MDBA and Saffra. So
it is likely that the technology transfer component and platform-
specific work-share components will be distributed across a broad-
base and a variety of companies, Rahul Gangal, Partner, Roland
Berger, a Munich-based strategic consulting firm told The Wire.

According to analysts, the work distributed to other companies could

come in the form of simple outsourcing or even other joint-ventures,
which should be announced shortly.

Reliance Com signs term sheet with Brookfield to sell 51% stake in tower unit for Rs
11,000 cr
By Deepali Gupta, ET Bureau | Updated: Oct 20, 2016, 04.16 PM IST

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Reliance Communications to sell its part of
tower business to Brookfield infra Group
By Express News Service | Published: 14th October 2016 12:39
PM |
Last Updated: 14th October 2016 12:39 PM | A+A A- |

A worker cleans a mobile store of Reliance Communications Ltd,

controlled by billionaire Anil Ambani, in Kolkata, India, September 10,
2016. | Reuters
NEW DELHI: Brookfield Infrastructure Group will buy 51 per cent of
the tower business of Reliance Communications Ltd. (RCOM) for Rs.
11, 000 crore.
It is expected, that a considerable growth in tenancies based on
increasing 4G offerings by all telecom operators, and the fast
accelerating trends in data consumption, are expected to contribute to
significant growth in revenues and profitability for the towers business
in the future

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The assets of RCOM will be transferred from Reliance Infratel Ltd.

(RITL) to form a separate special purpose vehicle (SPV) to be owned
by Brookfield.
RCOM will continue as an anchor tenant on the tower assets, under a
long term agreement, for its integrated telecommunications business..
RCOM will also enjoy 49% future economic upside from the towers
business, based on certain conditions.
Both the companies will also explore opportunities for consolidation
in the towers industry in India that will further enhance growth and
value creation in the future. RCOM intends to utilize the proceeds of
the proposed transaction solely to reduce its debt.
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Move aimed at paring debt

MUMBAI, OCT 14:

Nearly six years after Reliance Communications (RCom) put its tower assets on
the block and a failed attempt at an initial public offering (IPO), the telecom
major has succeeded in finding a buyer.

On Friday, RCom agreed to sell 51 per cent of its tower unit Reliance Infratel to
global alternative asset manager Brookfield Infrastructure Group for 11,000
crore in cash. RCom, the company controlled by billionaire Anil Ambani, will
hold the remaining 49 per cent stake, which it intends to monetise later.

The tower deal will considerably reduce Ambanis telecom debt. RCom had
recently announced a plan to combine its wireless business with Aircel. These two
transactions put together will reduce RComs debt from 42,000 crore to
17,000 crore. The company is now looking to monetise its real estate to raise
another 5,000 crore. Shares in RCom ended up 2.57 per cent at 47.90 on the
BSE.

The deal

Under the terms, RCom will transfer the tower assets and related infrastructure
to a separate special purpose vehicle owned by Brookfield. According to sources,
the deal is subject to revenue realisation targets based on assured tenancies and
growth projected by RCom.

Following the deal, RCom will continue as an anchor tenant on the tower assets
under a master service agreement. Aircel and MTS, which will soon merge with
RCom will also be tenants. Reliance Jio also has an agreement to use these tower
assets.

The firms also see several opportunities for consolidation across the tower sector
in India to further enhance growth and create value, RCom said in a statement.

Over the past six years, RCom has been looking to sell its entire stake in the tower
unit and had held talks with many companies, including Mumbai-based GTL
Infrastructure Ltd. In 2010, RCom filed for an IPO to raise up to 5,000 crore.
But the plans had to be dropped.

Last year, a consortium led by TPG Capital Management LP initiated discussions.

However, the deal did not go through due to differences on valuation. While
Ambani was looking for an enterprise value of over 20,000 crore, the bidders
were not offering more than 15,000 crore. Now with the three-way merger
between RCom, MTS and Aircel, the assets may have received higher valuation.

RCom-Brookfield deal: Reliance

Infratel minority investors want to
give up their stake
Investors have invoked a shareholder agreement under which RCom is obliged
to buy their stake and seek their approval before the majority stake sale

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Deborshi Chaki

Reliance Communications has signed a binding agreement with Brookfield

Infrastructure for a majority stake sale in telecom tower arm Reliance Infratel
for Rs11,000 crore. Photo: Pradeep Gaur/Mint
Mumbai: A group of private equity (PE) and hedge funds representing minority
shareholders of Reliance Infratel Ltd, the telecom tower arm of Anil Ambanis
Reliance Communications Ltd (RCom), have demanded that RCom buy their
stakes back before going ahead with its majority stake sale to Brookfield
Infrastructure Group, two people aware of the development said on condition of
anonymity.

The PE funds have invoked a shareholder agreement under which RCom is

obliged to buy their stakes back and also seek their approval before a majority
stake sale in Reliance Infratel, said the first person, a senior partner in a private
equity fund which is one of the minority shareholders of Reliance Infratel.

On 21 December, RCom signed a binding agreement with Brookfield to sell a

51% stake in Reliance Infratel for Rs11,000 crore. RCom currently owns close
to a 96% stake in the company, while the remaining ownership is with minority
investors.

ALSO READ | RCom signs binding agreement with Brookfield for sale of
tower business

The minority shareholders are still in talks with RCom to resolve the matter
amicably but have also engaged a Mumbai-based law firm to explore legal
options, said the second person cited above.

PE and hedge fund investors NSR Partners, HSBC Daisy Investment

(Mauritius), George Soros Quantum Funds, Galleon, HSBC Daisy Investment
(Mauritius), Drawbridge Towers, Investment Partners B (Mauritius) had
invested $287 million in Reliance Infratel in July 2007 but there have been
reports of conflict between the two sides.

While NSR declined to comment, emails sent to RCom and other minority
investors remained unanswered till the time of going to press. An HSBC India
spokesperson responded saying, We do not comment on market speculation.

The Economic Times reported in March last year that the PE Funds had opposed
an earlier move by RCom to merge Reliance Infratel with another group
company, citing concerns around the valuation of the company. The PE funds
are understood to have valued the company at close to Rs32,000 crore whereas
RComs deal with Brookfield values the company at close to Rs22,000 crore.

RCom is one of the most indebted mobile phone service providers in India with
debt of about Rs42,000 crore. RCom is also merging its wireless business with
smaller rival Aircel and has said that the deal with Brookfield will help reduce
its debt burden as it will transfer a part of its loans to the new venture.
 Under the terms of the agreement, the telecom tower assets will be transferred
from Reliance Infratel to a separate special purpose vehicle to be owned by
Brookfield. RCom will continue as an anchor tenant in the tower assets.
Reliance Infratel has a portfolio of 45,443 towers and is present in all 23
telecom circles of the country.

Reliance Group companies have sued HT Media Ltd, Mints 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.

RCOM plans to sell

tower assets to
Brookfield for Rs
11,000 crore
Anil Ambani-led Reliance Communications has signed a
deal with Brookfield Infrastructure Group to let the latter
acquire all the tower assets of RCOM
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By: IANS | Published:October 14, 2016 3:26 pm
RCOM will continue to enjoy 49 per cent future economic upside from the towers
business

Industrialist Anil Ambani-led Reliance Communications has signed a non-

binding term sheet with Brookfield Infrastructure Group, through which the
latter would acquire all the tower assets of RCOM for an upfront cash payment
of Rs 11,000 crore, a company statement said here on Friday. Reliance
Communication will then become a tenant for the purpose of using the towers
for its integrated telecom business.
Reliance Communications (RCOM) today announced the signing of a non-
binding Term Sheet with Brookfield Infrastructure Group in relation to the
proposed acquisition of RCOMs nationwide tower assets and related
infrastructure by Brookfield, the statement said.
RCOM will also enjoy 49 per cent future economic upside from the towers
business, based on certain conditions, it added. Brookfield is an infrastructure
assets management company.
According to sources, this is the largest-ever foreign direct investment coming
into India in the infrastructure sector.
Under the Term Sheet, the specified assets are intended to be transferred from
Reliance Infratel on a going concern basis into a separate special purpose
vehicle, to be owned by Brookfield. RCOM will continue as an anchor tenant on
the tower assets, under a long term master services agreement, for its integrated
telecommunications business.
RCOM and Brookfield expect considerable growth in tenancies based on
increasing 4G offerings by all telecom operators, and the fast accelerating trends
in data consumption, which are expected to contribute to significant growth in
revenues and profitability for the towers business in the future, the statement
said.
Both the companies also see several opportunities for consolidation in the
towers industry in India that will further enhance growth and value creation in
the future. RCOM intends to utilize the proceeds of the proposed transaction
solely to reduce its debt.
The statement added: The proposed transaction is subject to definitive
documentation, customary approvals and certain other terms and conditions.
Accordingly, there can be no certainty that a transaction will result. Further
announcements will be made at an appropriate stage.
For all the latest Tech News, download Indian Express App now

FROM AROUND THE WEB

Brookfield set to bid for Rcoms

Towers
By Bhagyashree Vivarekar | 7/9/2016 12:26 PM Saturday
1 0

0 0

According to the media report Reliance Communications has sought a sincere

bidder for its Reliance Infratel tower business. US private equity firm
Brookfield Asset Management has come up as a serious bidder for the same.
Reliance Infratel tower's business sale has been delayed since January 15 when
the deal was supposed to have been completed. Earlier TPG Capital had valued
it below Rs 21500 crores. Considering it to be too less RCom had appointed
Tillman Global Holdings to find a suitable bidder. TPG and Tillman had jointly
tried a non-bidding pact to buy the tower assets, but failed.

RCom thought the sale of tower business would help make up for its huge debt.
The deal with Brookfield is likely to take place after its possible deal with
Aircel. Both the companies will enter into a joint venture and thereby transfer
nearly Rs 14000 crore debt each. The deal with Brookfiled would be completed
within a month of the joint venture with Aircel. RCom would also seek
Ericsson, its pan India managed services partner to identify overlaps in the
venture.

However, Brookfield has valued the towers at just Rs 15000 crore which is
much lower than the expectations of RCom to sell those above Rs 21000 core at
least. The coming monsoon session of Parliament is also to be watched out for,
wherein the Congress has already alleged the Modi government for under-
reporting of revenues of telecos worth Rs 45000 crores. The monsoon session is
likely to clear the matter.

Reliance Communications, the telecom arm of Reliance offers 3G, DTH and
internet based services in India and abroad. The company is also trying a trading
and sharing of spectrum with Mukesh Ambanis Reliance Jio for virtual
consolidation.

- See more at: http://www.dsij.in/article-details/articleid/15023/brookfield-set-

to-bid-for-rcom%E2%80%99s-towers.aspx#sthash.QwwUNGZL.dpuf
RCom surges 10% on signing pact for stake sale in towers unit
By ETMarkets.com | Dec 21, 2016, 01.34 PM IST

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Anil Ambani says RCom & Jio have virtually merged

By ET Bureau | Sep 28, 2016, 05.34 AM IST

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MUMBAI: A decade after the Ambani brothers split, Reliance CommunicationsBSE 1.57 %
(RCom) Chairman Anil Ambani announced that his telecom company has virtually merged with
Reliance Jio Infocomm, owned by elder brother Mukesh.

As far as our 100 million customers are concerned, as far as our 1 million retailers are
concerned, as far as our employees are concerned, and as far as our vendors and partners are
concerned, there has already been a virtual merger of the two organis ..

Read more at:

Two Committed Brothers
RCom and Jio have pacts to share and trade spectrum. Besides, the two also have tower and
fibre-sharing agreements. The two telcos have also synced their network operating centres,
optic fibre service contracts and network maintenance functions.

There are two committed brothers Mukesh Ambani and Anil Ambani both working
relentlessly to fulfil the dream of Dhirubhai Ambani, said Ambani.

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Reliance Communications shares rose 1.2% to close at Rs 48 on the Bombay Stock Exchange
on Tuesday. Shares of Reliance IndustriesBSE 3.94 % (RIL), the parent of Jio, ended flat at Rs
1,110.45.

Jio didnt respond to emailed queries requesting comment.

In an interview to ET published on September 8, Mukesh Ambani had said he was happy that
the two brothers had overcome all their past issues at the family level, but added that their
businesses were separate. ..

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Reliance Communications shares rose 1.2% to close at Rs 48 on the Bombay Stock Exchange
on Tuesday. Shares of Reliance IndustriesBSE 3.94 % (RIL), the parent of Jio, ended flat at Rs
1,110.45.

Jio didnt respond to emailed queries requesting comment.

In an interview to ET published on September 8, Mukesh Ambani had said he was happy that
the two brothers had overcome all their past issues at the family level, but added that their
businesses were separate. ..

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&utm_medium=text&utm_campaign=cppst
The older Ambani had said Jio would work with all the players in the industry, including RCom,
in a number of mutually beneficial areas.

ET had reported on June 27, 2014, that the two companies would remain independent but an
operational merger between them was on the way.

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Working in tandem
The announcement of a virtual merger of the two companies follows Jios launch earlier this
month. The undivided Reliance Industries had made its first foray into the telecom sector in
2002. Mukesh Ambani and his close friend and aide Manoj Modi spearheaded the launch of the
telecom venture.

But after the family division, following Dhirubhai Ambanis death, the telecom business along
with the power and financial services business ..
Read more at:
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&utm_medium=text&utm_campaign=cppst
But after the family division, following Dhirubhai Ambanis death, the telecom business along
with the power and financial services businesses went to Anil Ambani, while the oil and
petrochemicals business remained with his older brother.

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The two brothers signed a noncompete pact, which was scrapped by mutual agreement in
2010. Subsequently, the older Ambani re-entered the telecom sector by buying a company that
had acquired pan-India 4G airwaves in an auction. The acquired company was subsequently
renamed Reliance Jio Infocomm.

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RCom and Jio have already been working in tandem from the start of this year when the former
announced it was upgrading all its data users to Jios 4G network, in what was described by
some people as the first test for the new companys 4G data services. RCom then ran a pilot
offering 4G data dongles worth Rs 3,999 at Rs 899 in April this year. The service offered 4G at
the price of 3G, but the 4G was riding on the Jio network under the sharing agreement.

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With the virtual merger, and the merger with Aircel, RComs need for capex and spending at
the upcoming auction is limited, the younger Ambani said, adding that putting up a 4G network
would have cost Rs 20,000 crore or so.

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Com has a total debt of around Rs 42,000 crore. It is in the process of undertaking a 50:50
merger with Aircel, and around Rs 20,000-crore debt, that includes Rs 14,000 crore of long-term
debt and Rs 6,000 crore of installments payable to the Department of Telecommunications.

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(DoT) over 10 years for spectrum purchases, will be transferred to the merged entity. In
addition, the company hopes to retire more than Rs 16,000 crore through the sale of its tower
assets. Ambani said RCom will announce the sale of its tower assets in the coming weeks. ET
has reported that RCom is in advanced negotiations with Brookfield, the Canadian fund, to sell
its tower portfolio for Rs 16,500-19,500 crore ($2.5-3 billion).
Read more at:
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&utm_medium=text&utm_campaign=cppst
ommenting on RComs future, Ambani said the company possessed necessary airwaves across
2G, 3G and 4G bands in addition to the spectrum sharing and trading deals with Jio, and would
become one of the top telcos in 12 out of 22 telecom circles after the Aircel merger.

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Telenor approaches Aircel-

RCom to explore a merger
through share swap
Telenor is a fringe player in the pecking order amongst telcos, but it has
a little over 50 million active customers.Arijit Barman&Deepali Gupta | ET
Bureau | January 31, 2017, 08:39 IST

NewsletterA A

inShare31

MUMBAI: Norways Telenor has approached Aircel and Reliance

Communication to explore a merger possibility through share swap as
consolidation grips the Indian telecom industry, said three executives
aware of the matter.

Telenor has expressed its willingness to combine its business, customer

base plus spectrum with the merged Aircel-RCom entity, even though the
spectre of the apex court looms large over the Indian operations of the
Malaysian telco.

Upon completion, Telenor will own 10% in the three-way alliance.

Both Maxis Communication Bhd, Aircels promoter, and RCom will get
proportionally diluted and end up owning 45% each in the venture.

Discussions among the three had started around last Christmas but it has
been in a limbo for the past few weeks due to the Supreme Court shadow
over Aircels local operations. By the end of this week, there will be clarity
on that front. If the court decides to quash Aircels licence, then even the
bigger Aircel-RCom merger will collapse, said an executive aware of the
ongoing discussions.

Aircel has been saying that its operations are ring fenced but a green
signal from the court will kick-start the negotiations. Telenor and RCom
spokespersons declined to comment, while mails to Aircel went
unanswered till the time of going to press.

On January 6, the Supreme Court had said that it would revoke Aircels
licence if its promoter Ananda Krishnan didnt appear in an ongoing case
of corruption in a lower court.

The court also barred the transfer or sale of Aircels 2G airwaves to athird
party in the interim.

Last September, Reliance Communications had announced its long-

awaited Rs 65,000 crore merger of its wireless business with that of
unlisted telecom operator Aircel, marking the first move towards
consolidation and creating the country's fourth-largest phone company in
terms of customers and revenue.

Meanwhile, parallel discussions between Telenor and Bharti Airtel stayed

alive even though the former has offered only the cash value of Telenors
spectrum, said another person familiar with the situation.
Earlier this month, Airtel had issued a statement that it was in talks to buy
out Telenors India arm. Telenor wants to leave as soon as it can. It will
take the deal that will close faster, said a person familiar with the
Norwegian companys predicament.

A merger will help Telenor stay invested in a pan India operation as

against a complete exit.

RCom and Aircel gain additional subscribers and additional 4G LTE

spectrum. Telenor is a fringe player in the pecking order amongst telcos,
but it has a little over 50 million active customers.

But importantly, it owns spectrum that can be used for 4G by an acquirer

in the 1800 MHz band in seven circles. It offers 2G services in six circles.

It has started a narrowband 4G pilot in Varanasi meaning using less

than the stipulated 5MHz spectrum.

It offers 4G services in 27 towns across the 6 circles but internet

connectivity speed it offers is lower than regular 4G.

The company says it will soon expand its 4G to 10 more cities. Close to
80% of its sites have been upgraded to LTE.

However, it is yet to start commercial operations in Assam. The telco

offers low-cost voice and data services and brands itself sabse sasta
(cheapest).

However, at a time when Reliance Jio is offering free trial service and big
telecom operators are doling out freebees, the price game is gnawing at
Uninor, the Indian brand for Telenor uses.

RCom, Aircel merger deal

may run into debt hurdle:
Report
The condition for the merger that two parties each reduce their debt to
less than Rs.10,000 crore is unlikely to be met unless RCom manages to
sell its tower assets and Aircel sells some of its spectrum, the report
said.Danish Khan | ETTelecom | Updated: February 16, 2016, 10:47 IST
NewsletterA A

inShare33 4

NEW DELHI: RCom's plan to merge its wireless business with Aircel to
create a bigger entity is unlikely to be concluded within the 90 days, and
the deal may run into debt hurdle, Mint reported on Monday.

The condition for the merger that two parties each reduce their debt to less
than Rs.10,000 crore is unlikely to be met unless RCom manages to sell its
tower assets and Aircel sells some of its spectrum, the report said.

In December last year, RCom had entered into 90-day exclusive talks with
the shareholders of Aircel, to consider the combination of the wireless
business of RCom and Aircel. The merger will likely create India's fourth
largest telco, after Airtel, Vodafone and Idea Cellular.
An analyst anonymously told the publication that merger talks between
Aircel and RCom will get extended till after the spectrum auction. "It does
look like it will happen soon but there is still no word on the Aircel part of
it. Until that happens, there can be no deal," he was quoted as saying.

Another person familiar with discussions told the publication that tower
deal was being delayed because the top management of the group was busy
with a number of deals to reduce debt across the group.

Anil Ambani-owned RCom is currently in the process of completing the

acquisition of Shyam Sistema TeleServices Ltd.

RCom's debt stood at around Rs.39,000 crore at the end of the December
quarter while Aircel's debt was estimated at Rs.20,000 crore, the report
said, adding that Aircel may have to sell some of its spectrum in the 2300
Mhz band to proceed with the merger.

Aircel had paid Rs 3,438 crore for the spectrum in seven circles and an
additional Rs.6,500 crore for 2,100Mhz spectrum in 13 circles. It currently
offers 4G services for enterprises in all circles where it has licenses.
 RCom-Aircel merger to be
finalized by early September:
Report
Sources have said that the agreement for the Reliance
Communications and Aircel merger is expected to be signed by the
first week of September. This merger would lead to the formation
of the third largest telecom operator in the country with over 196
million subscriber base.
By PTI | Updated: August 29, 2016 11:20 AM IST

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NEWS
Telecom operators Reliance Communications and Aircel are
expected to sign the agreement for merger of their businesses
by the first week of September. Term sheet between the two
companies (RCom, Aircel) have been finalized. Definitive
agreement for merger between the two companies is expected
to be signed in a week or 10 days, an industry source close to
the development said. RCom and Aircel talks, if successful,
would lead to formation of third largest telecom operator in the
country with subscriber base of over 196 million.

At present no regulatory approvals are required. The process

for regulatory approval will begin after RCom and Aircel sign
definitive agreement. It should take around 4-6 month time to
complete merger and the combined entity will be rebranded,
the source said. The new entity, which is in the works, will hold
spectrum across all allocated bands 800 Mhz, 900 Mhz,
1800 Mhz, 2100 Mhz and 2300 MHz for 2G, 3G and 4G
services. On the other hand, RCom and Sistema (MTS) are in
process of merger. Sistema will hold 10 percent stake in the
new entity that will formed post its merger with RCom. In
December last, the two firms announced entering into 90-day
exclusivity period for the merger deal that will exclude RComs
tower and optical fiber assets for which a separate sale process
is ongoing. The talks were later extended twice.

The merged entity is expected to have Rs 25,000 crore

businesses from the first day of its operation and is estimated
have EBIDTA (cash flow) Rs 7,000 crore and finance cost about
Rs 3,000 crore. RCom and Aircel have had nil free cash flow
since long time but the resultant entity is being structured in a
manner to have Rs 4,000 crore free cash flow which it can use
for investments in network, the source said. RComs net debt
at the end of 2015-16 was Rs 41,362.1 crore. Debt
of Aircel could not be ascertained. At the end of last fiscal,
RComs consolidated revenue stood at around Rs 22,000 crore.