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RCom gets SEBI nod for demerger scheme

Anjana Das, New Delhi
15/03/2017   0 Comments

Reliance Communication today inched one step closer to the merger of its wireless division into Aircel eventually as it received the  National Stock Exchange (NSE) and BSE and market regulator SEBI nod for the proposed Scheme of Arrangement for demerger of the Wireless division of the Company.
 
It now has  filed application with the National Company Law Board , Mumbai Bench for the same. The proposed transaction is subject to other necessary approvals. Post closing, the Company and the present shareholders of Aircel Limited will hold 50% each in Aircel. RCom share price was up 2.48% at Rs 37.15
 
Reliance Communications Ltd. has received approval of the Securities and Exchange Board of India (SEBI), BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) for the proposed Scheme of Arrangement for demerger of the Wireless division of the Company into Aircel Limited and Dishnet Wireless Limited (the Scheme) , it said.
 
The merger will create the country’s third-largest mobile operator by subscriber base. AT the moment Vodafone and Idea are in a merger talk to take on the Mukesh Ambani telecom company Jio. Earlier Airtel acquired marginal player Telenor's  India operations in seven circles  to compete with Jio on a larger scale. Airtel is the number one operator by subscribers and revenue share.
 
The new entity will  have only  RCom's  cellular business, which has around 100 million subscribers. Its Other businesses, including tower assets and fixed-line enterprise units, will continue to remain with RCom.  After the demerger , the RCom wireless unit will be merged with Aircel.
 
RCom and Aircel’s Malaysia-based promoter Maxis Communications Berhad  (MCB) will hold 50 per cent each in the venture. RCom had earlier merged with Russian company Sistema JSFC’s Indian operations — MTS — under which the Russian company holds a 10 per cent stake in RCom.
 
The merged entity will, however, carry a debt of nearly ?28,000 crore — which both partners will share equally. RCOM and MCB to hold 50% each in ‘Mergedco’  (the new venture) with equal representation on board and committees. This transaction will reduce RCom debt by Rs 20,000 crore or over 40% of total debt, and Aircel debt by Rs  4,000 crore on closing in 2017.
 
There is an ongoing case against Maxis top officials in the Supreme Court pertaining to Aircel-Maxis deal case. But RCom feels  there would not be any impact on the the merger of its wireless business with that of Aircel . Supreme Court had said these Malaysian nationals, who have been summoned as accused in the Aircel-Maxis deal case, were not respecting the orders of the courts here and if they "don't care about the law and court's order" the apex court will deal with them.
 
Bureaucracy Today has learnt that RCom also has to get CCI (Competition Commission of India) approvals for the same which the company has applied.  
 
RCom expects to cut down 70 percent of its debt totalling around Rs 42,000 in 2017-18 by leveraging its assets including by merger of its wireless business with that of Aircel and sales of mobile towers, Rcom had earlier stated. Recently the company signed a deal with Canadian tower major  Brookfield  to sell its tower business to cut down the debt. The deal will fetch Rs 11,000 crore in its book.
 
RCom posted its first-ever consolidated net loss for the quarter ended December 31, 2016. Last week, it reported a consolidated net loss of Rs 531 crore for October-December 2016, mainly due to free 4G services being offered by his elder brother Mukesh Ambani's Reliance Jio and exit from its profitable CDMA operations  and increase in amortisation and interest expense aggregating to Rs 278 crore on account of capitalisation of  850 MHz spectrum liberalisation fee. The company had posted net profit of Rs 303 crore in the same period a year ago.

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