Russian investment firm Sistema has entered into “exclusive discussions” with Reliance Communications about a potential merger of their Indian telecoms businesses.
In terms of connections, Rcom is significantly bigger than SSTL (which trades as MTS India) – 109.5 million wireless connections compared with 8.9 million.
The proposed deal will come in the form of a stock swap. Sistema noted that the talks are “indicative and non-binding in nature”, and there is no certainty that a deal will be done.
According to an earlier Economic Times report which suggested such a deal may be on the cards, SSTL is likely to end up with less than 10 per cent of the merged entity, although it was also suggested that the Russian company may infuse more funds in order to take a larger share.
In the first quarter of 2015, SSTL saw a loss attributable to Sistema of RUB2.08 billion ($37.8 million), compared with RUB1.1 billion in the prior-year period, on revenue of RUB3.6 billion, up from RUB1.8 billion.
The Russian company has previously said it is expecting the business to achieve OIBDA profitability in the first half of 2015.