Reliance Communications this week announced the completion of its takeover of Sistema Shyam Teleservices Ltd (SSTL), just hours after it revealed plans to pull out of the consumer telecoms business in India, selling its assets in that area in order to pay down debt…
Reliance Communications this week announced the completion of its takeover of Sistema Shyam Teleservices Ltd (SSTL), just hours after it revealed plans to pull out of the consumer telecoms business in India, selling its assets in that area in order to pay down debt.
The deal gives SSTL a 10% stake in RCom. It also boosts RCom's spectrum portfolio, giving it a additional 30 MHz of 800 MHz-850 MHz frequencies and extends the validity of its spectrum licences in eight circles by a period of 12 years.
RCom announced the SSTL deal two years ago, but only secured the approval of the Department of Telecommunications (DoT) last week.
In the interim it attempted to merge with rival Aircel, a transaction that was vital to its debt-management plans, but that deal fell apart a month ago, leaving RCom's future in the Indian mobile market in jeopardy.
The telco shared details of an alternative debt-reduction plan, part of which was to monetise its spectrum assets, including those it would pick up via the SSTL deal. And on Monday it fleshed out that plan further, noting that it would pull out of the consumer telecoms market, including mobile, as part of a debt restructuring plan that will see lenders take a 51% stake in the company.
It aims to pay off 170 billion rupees (€2.3 billion) of debt through the sale of mobile spectrum, telecoms towers, fibre infrastructure and media convergence node assets.
The resulting company, the new RCom, will focus on the B2B market, including enterprise, carrier and Internet data centre operations, as well as operating its global submarine cable network. It will have a debt burden of INR60 billion.
It aims to close down its mobile business by the end of November.