HOME > BUSINESS > RCom, MTS merger is all about 4G LTE – analysts

RCom, MTS merger is all about 4G LTE – analysts

Anil Ambani - Chairman of Reliance Communications
Anil Ambani – Chairman of Reliance Communications
Reliance Communications and Sistema Shyam Teleservices (MTS) announced that they were in exclusive discussions to merge their operations.

While this was seen as being in the works, especially after a recent statement by Sistema’s Dmitry Shukov, analysts are saying that this merger will be a win-win for both parties.

“If they can merge, then it will be easy for RCom to pair its recently acquired 4G spectrum with MTS’ spectrum, which is already liberalized,” said a Mumbai-based analyst.

RCom had turned out to be surprisingly aggressive in recent spectrum auctions and had bid for and won 1.25 to 2.5 MHz of spectrum in many areas.

Though MTS did not participate in the auction, it had bought similar chunks of spectrum in many circles in previous auctions.

The move by RCom to buy just 1.25 or 2.5 MHz of 4G spectrum had puzzled many experts, as you need at least 3.75 MHz of spectrum per circle to launch 4G services. Ideally, 4G LTE requires 5 MHz of contiguous spectrum.

Therefore, it was speculated that RCom is planning to pool its 4G spectrum with that of Reliance Jio. If that was not possible, it was expected that RCom would pay ‘liberalization charges’ to the government and convert part of its CDMA spectrum into 4G spectrum.

However, such liberalization charges could run into hundreds, if not thousands, of crores of rupees.

Meanwhile, MTS or Sistema was frustrated in its designs to become a major data player across India by the scarcity of spectrum. To launch 4G, it would need about 1.25 MHz of spectrum in each of its nine circles

Even if it got that extra 1.25 MHz of spectrum in its 9 circles, it would still need a place to transfer its existing CDMA subscribers to.

With such a merger, said analysts, MTS and RCom could pool their liberalized (4G) spectrum into one 5 MHz chunk, and use RCom’s existing unliberalized CDMA spectrum to service both of their CDMA subscribers.

However, analysts also see many challenges. The department of telecom has exhibited inconsistent and difficult-to-predict decision making, especially with regard to giving its nod to mergers and buyouts.

Idea Cellular, which bought out Spice Telecom a few years ago, ran into regulatory troubles after its merger was not given the final nod by the department for years.

“The government looks at all mergers and sale with suspicion, and this could mean a lot of delays or objections,” said another analyst.

SHARE SWAP DEAL

According to a statement from RCom, the two companies are looking at a stock-swap merger, which means that no money will change hands. Owners of both companies will end up with shares in the combined company.

RCom said the following in a statement:

“Reliance Communications (RCOM) and AFK Sistema have entered into exclusive discussions on a potential merger between the Indian telecom business of Sistema Shyam TeleServices Ltd. (SSTL) and RCOM, through a stock swap. The discussions are indicative and non- binding in nature, and remain subject to due diligence, definitive documentation and approvals, as may be necessary. There is no certainty that any transaction will result.”

Only a few days ago, Dmitry Shukov, Chief Executive Officer of Sistema Shyam Teleservices had said he was looking forward to consolidation in the Indian telecom industry.

“Consolidation within the Indian telecom sector is bound to happen. The key catalysts now are the spectrum sharing and trading guidelines, which are expected to be issued by the Government. One hopes that clarity on such regulatory issues is received at the earliest,” he said.

Follow ULTRA.news
TRAI to hear the public on net neutrality in open house this month The Telecom Regulatory Authority of India has started registrations for an open house discussion on its upcoming recommendations on net neutrality.The open house discussion will be held on Wednesday, August 30 at 9:30 AM in New Delhi. The venue has not been finalized yet, and...
Reliance Capital receives Rs 378 cr from Nippon Life for AMC stake Anil Ambani Group's Reliance Capital said it received Rs. 378 crore from Nippon Life Insurance, one of the largest life insurers in the world, after the foreign company increased its stake in Reliance Nippon Life Asset Management Limited to 49%.The original agreement to incre...
Spectranet overtakes Airtel Broadband on Netflix speed ranking for India Netflix, the world's biggest distributor of movies, ranked Mumbai-based 7 Star cable network and Spectranet, which offers fiber broadband in several cities, as the fastest networks for prime time usage.The average speed available to Netflix was 2.77 Mbps on 7 Star cable and 2...
RCom says telcos facing cash flow issues due to ‘go slow’ approach by banks Telecom operator Reliance Communications said companies in the sector are facing cash flow issues due to what it called a 'go slow' approach taken by banks in disbursing loans.In an update on its 'standstill agreement' with its lenders, which provides it a window of seven mon...
RCom launches VPN services over 4G Reliance Communications launched a virtual private network service over its 4G service for the use of businesses.VPNs use software to create a virtual tunnel between two or more end points on the Internet.Since these are not a real private networks -- which would require ...
Bajaj Auto, KTM decide to invest into Husqvarna motorcycle brand Bajaj Auto said it agreed with its Austrian associate KTM to expand the brand sales and shift some of the production of Husqvarna motorcycles to Bajaj's factory in Chakan, Maharashtra.The brand Husqvarna, founded in 1903 in Italy, used to be owned by BMW at one time. It was b...
News Corp buys Bangalore-based media software firm GyanMatrix Rupert Murdoch's News Corp announced yet another acquisition in India with the agreement to purchase Bangalore-based GyanMatrix Services Private Limited.P Hariharan, founder GyanMatrixThe company, which provides software solutions for media and publishing companies, will...
HPCL appoints bankers for Rs 6,000 cr FCCB issue Hindustan Petroleum Corp Ltd said it had appointed banking intermediaries for organizing investor meetings in the run up to raising Rs 6,000 cr ($930 mln) by selling foreign-currency denominated bonds.The bonds will be non-convertible, and will be issued if the meetings disco...
Anil Ambani Group ties up with Thales for Rafale contracts Reliance Defence, the defence manufacturing arm of the Anil Ambani group, said it will form a joint venture in India with global defence manufacturer Thales to carry out some contracts related to the Rafale jet deal.The Indian company will hold 51% of the equity while the fo...
Axis Bank confirms exiting POS maker Mswipe Axis Bank confirmed it had sold its 8% share in new-generation card-swiping-machine company Mswipe Technologies.In a regulatory filing, the private sector bank said it sold its 8% stake for Rs 80.94 cr, or Rs 4,249 per share.Mswipe is one of the new generation, low-cost ...
RIL stock up as Reliance Jio proves doubters wrong, avoids an April dip in subscribers Shares of Reliance Industries rose 3.5% today -- an extraordinary move for such a large company -- after it emerged that not only did the company not lose subscribers when it made the transition from free to paid services in April, it actually added a few million.The result ...
RCom ‘respectfully disagrees’ with Fitch and Moody’s on its credit rating Anil Ambani-led Reliance Communications said it disagrees with the decision of agencies Moody's and Fitch to downgrade the company's credit rating based on its 'standstill agreement' with its lenders.Shares of RCom fell 4% to Rs 19.30 on the National Stock Exchange today ...
Grasim-Adiya Birla Nuvo merger approved, ABFSL listing soon The Aditya Birla Group said it got the approval of the Company Law Tribunal for the merger of Aditya Birla Nuvo Ltd and Grasim industries Ltd and the listing of Aditya Birla Financial Services Ltd.The approval was obtained from the Ahmedabad bench."The approved Scheme ha...
Sun TV could benefit from RCom’s financial troubles Newer equipment from Reliance Digital TV come with Chois HD 4K brandingSun Direct, the DTH arm of Sun TV, could end up benefiting from the financial troubles faced by Anil Ambani Group's Reliance Communications.Speaking to media yesterday, Reliance Communications top hon...
Bharti Airtel gets SEBI and stock exchange nod for Telenor acquisition Bharti Airtel said it received the approval of the Securities and Exchange Board of India, BSE and National Stock Exchange of India for its proposed merger with Telenor India. Bharti Airtel further stated that Telenor India and Airtel have today filed the joint company appli...
RCom formally assures lenders it will pay Rs 25,000 cr in four months Anil Ambani Group's telecom arm Reliance Communications said it has 'formally' communicated to its lenders that it will pay an amount of Rs 25,000 cr to them on or before Sept 30.The latest statement from the telecom operator comes as a way of reassuring investors and lenders...
RCom says looking to refinance various payments till September Anil Ambani Group's Reliance Communications said it was in talks with its lenders and partners to put off some of the instalment payments that the company had to pay until the completion of its merger with Sistema Shyam Teleservices and Aircel Cellular by September this year....
RCom shareholders approve Aircel merger The shareholders of Reliance Communications approved the demerger of the wireless operations of the company into Aircel Limited and Dishnet Wireless Limited, the Anil Ambani Group company said.The Scheme was also approved at a meeting called on the directions of the National ...
Reliance Jio helped India save Rs 18,000 cr, but rivals took the hit Free services from Reliance Jio, the telecom services arm of Reliance Industries, brought down the amount of money paid by telecom subscribers in India by about Rs 4,400 cr in just the last three months of 2016, an analysis of the sector data revealed.The numbers indicate tha...
Airtel buys high-capacity 4G spectrum from Tikona in five circles Airtel Chairman Sunil MittalBharti Airtel said it has agreed to buy 4G spectrum from Tikona Digital Networks in five telecom circles, giving the company a pan-India footprint in the crucial capacity band and helping it compete on an even footing with Reliance Jio.Airtel ...
Vodafone Idea merger to save Rs 7,000 cr per year; one-time cost Rs 3,000 cr The Idea Cellular-Vodafone merger announced today will save about Rs 14,000 cr in operating expenses per year for the combined entity after four years of merger, the two companies said.However, due to the applicability of spectrum caps on the combined entity, the deal will al...
Competition Commission clears RCom-Aircel merger Anil Ambani Group said the Competition Commission of India has cleared the merger of its telecom unit Reliance Communications with the wireless operations of Aircel Cellular, owned by Maxis Berhad of Malaysia.The clearance was expected since the two companies have very small ...
RCom provides 0.5 GB/day of 3G data at Rs 99 per month Reliance Communications, the telecom arm of Anil Ambani Group, has unveiled what is probably India's cheapest 3G data plan.The company said its subscribers will get 0.5 GB of data every day for 28 days if they recharge with Rs 99.If they are in a non-3G circle, they c...
RCom to offer 3GB 4G/3G data at Rs 149 Anil Ambani's Reliance Communications Ltd is about to announce a deal under which it will offer 3GB of 4G or 3G data for Rs 149 as well as unlimited on-net calls.It will also announce a competitor to others' daily limit plans. Its unlimited daily plan will be applicable to 3G...
MTNL says not aware of BSNL merger talks; stock up 16% Mahanagar Telephone Nigam Ltd, the state-owned telecommunications operator in the metro areas of Delhi and Mumbai, said it was not aware of any 'restarting' of talks related to its merger with Bharat Sanchar Nigam Ltd, the pan-India telecom operator owned by the public."We ar...