India’s fourth largest operator Reliance Communications (RCom) and Sistema Shyam Teleservices (SSTL) are expected to merge within a month, according to a report in the Financial Express.
The two companies began talks in June for a possible merger via a stock swap.
The firms reportedly have completed the due diligence and the boards will meet next month to confirm the deal, which would give Russian investment firm SSTL an 8-10 per cent interest while RCom would take the remaining controlling stake.
SSTL, which operators under the MTS brand, is one of the country’s smallest operators with 8.6 million connections, or less than 1 per cent market share. RCom had 110 million connections at the end of Q3 for an 11 per cent share, according to GSMA Intelligence.
The merger is being structured so the firms aren’t liable for paying tax on the deal, which would extend the validity of RCom’s licence in eight service areas from 2021 to 2033, the Financial Express said.
The pending merger comes as RCom announced last week it will enter into a “strategic partnership” with 4G newcomer Reliance Jio Infocomm to trade and share 800-850MHz spectrum to boost its 4G offering.
RCom chairman Anil Ambani reportedly termed the pact as a “virtual consolidation” and said talks are at an advanced stage.
The country’s three largest mobile operators – Bharti Airtel, Vodafone India and Idea Cellular – as well as Aircel and state-owned BSNL, have recently announced plans to launch 4G services by the end of the year or early in 2016. Jio is rolling out its nationwide 4G network and plans to launch service by December.