Reliance Communications gained 2.5% to Rs 52.35 at 9:25 IST on BSE after the announcement that company will get merged with Aircel.
The announcement was made after market hours yesterday, 14 September 2016.Meanwhile, the BSE Sensex was up 30.59 points, or 0.11%, to 28,402.82.
On BSE, so far 12.59 lakh shares were traded in the counter, compared with an average volume of 27.75 lakh shares in the past one quarter. The stock hit a high of Rs 53 and a low of Rs 52 so far during the day.
Reliance Communications (RCom) said the company and Maxis Communications Berhad (MCB), promoters of Aircel, a leading pan-India mobile operator signed definitive documents for the merger of their Indian wireless businesses-the largest-ever consolidation in the Indian telecom sector. The RCom-Aircel combination will create a strong operator ranked amongst India's top 4 telecom companies by customer base and revenues, also ranking amongst the top 3 operators by revenues in 12 important circles.
The merged company will have the second-largest spectrum holding amongst all operators, aggregating 448 MHz across the 850, 900, 1800 and 2100 MHz bands, and will enjoy enhanced business continuity through extended validity of spectrum holdings till 2033-35. The merged company will be one of India's largest private sector companies, with an asset base of over Rs 65000 crore ($9.7 billion) and net worth of Rs 35000 crore ($5.2 billion). The combined entity will enjoy substantial benefits of scale driving significant revenue growth, and capex and opex synergies with an NPV of Rs 20000 crore ($3 billion).
RCom and MCB will each hold a 50% stake in the merged entity 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. RCom's overall debt will reduce by Rs 20000 crore ($3 billion) or over 40% of its total debt, and Aircel's debt will reduce by Rs 4000 crore ($600 million), upon completion of the transaction in 2017.
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. On consummation of the merger, RCom and MCB are committed to additional equity infusion into merged company to further strengthen the balance sheet, fund future growth plans, and enhance financial flexibility. Both parties are already in talks with leading international investors in this regard. The merged company's subscribers will have access to nationwide 'gold standard' 4G LTE services on the sub-1 GHz band, under RCom's existing nation-wide spectrum sharing/ ICR arrangements with Reliance Jio Infocomm.
The combined 2G, 3G and 4G networks position the merged entity for further strategic collaborations, and provide the entity the unique capability to offer a robust platform of services across all customer segments in all 22 telecom circles, including the mass market, leading to a superior customer experience at an affordable price point, and bringing the Internet to All in furtherance of Prime Minister Narendra Modi's vision of Digital India.
Separately, RCom's consolidated net profit rose 5.88% to Rs 54 crore on 3.75% decline in total income to Rs 5361 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 14 September 2016. The company's earnings before interest, tax, depreciation and amortization (EBITDA) margin dropped to 29.1% in Q1 June 2016 from 34% in Q1 June 2015.
RCom is an integrated telecommunications service provider.
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