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CCI approves Reliance Communications-Sistema Shyam merger

A logo of Reliance Communications put up on a company outlet in Mumbai, India, on Sunday, March 25, 2007. Photograph: Abhijit Bhatlekar/Bloomberg News
A logo of Reliance Communications put up on a company outlet in Mumbai, India, on Sunday, March 25, 2007. Photograph: Abhijit Bhatlekar/Bloomberg News

New Delhi : The proposed merger of Sistema Shyam Ltd’s operations into Reliance Communications has been approved by the Competition Commission of India (CCI) to further scale major consolidation in the intensely competitive sector since 2009.

The approval from CCI was shared by Reliance Communications on Monday. After reports of RCom being in talks with SSTL for a possible takeover in an all-stock deal last year worth around Rs. 4,500-5,000 crore gave the shareholders a stake of around 10 percent in the merged entity.

Prior to the approval, the Bombay High Court has admitted an application seeking a merger between RCom and SSTL, after which the court had asked RCom to convene a meeting of shareholders.

The deal will give India’s fourth-largest carrier access to airwaves in the 850 Mhz band, which can be used for 4G services that it plans to start later this year. Moreover, it will be able to extend the validity of its licenses by 12 years in eight high revenue generating circles like Delhi, Gujarat, Karnataka and Tamil Nadu.

On the other hand, holders in SSTL, which has been struggling to grow its CDMA based telecom business, will get to be a part of a stronger company.

The airwaves can be used for 4G LTE technology more effectively than those operators have at the moment, because they are in the 800MHz band, which travels farther than higher frequencies.

After a thumbs up to the deal, RCom is likely to sell its telecom tower business, lower debt and thereafter merge with Aircel. Once the courts approve the merger with Sistema, RCom can proceed with the other deleveraging agreements it has planned. (ANI)

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