Reliance Communications, also known as RCom has called off the merger that was to bring together the wireless networking assets of RCom and Aircel. RCom is now on a plan to dispose of certain holdings to reduce their debt of Rs. 443.45 billion (at March end).
The Road Ahead for RCom
While RCom holds “regulatory uncertainties and interventions by vested interests” as the reason for calling off the merger with Aircel, they do have a roadmap ahead. Reliance Communication is now banking upon the 4G spectrum optimization for retaining and increasing their market share. Through this merger, Reliance Communication was set to reduce their debt by Rs. 250 billion by selling a stake to Brookfield Asset Management, based in Canada. RCom’s acquisition of Sistema Shyam Teleservices Ltd (SSTL) with the MTS brand is also due to complete soon. About the acquisition, RCom has said that “The addition of SSTL’s valuable spectrum holdings in the 800-850 MHz band will strengthen RCOM’s spectrum portfolio by 30 Mhz, and extend the Company’s spectrum validity period in 8 important circles in the country till the year 2033 i.e. for another 16 years.” The company currently holds spectrums worth Rs. 19,000 crores (based on latest auction pricing). This spectrum that covers 800/900/1800/2100 Mhz bands is likely to be monetized by RCom for further revenue with a focused B2B approach. Commenting on the current state of Indian telecom market, Reliance Communications stated, “Unlimited free voice offers and irrational pricing by operators have destroyed the profitability of traditional 2G/ 3G business.” While this can be safely interpreted as a direct hit on Reliance Jio, RCom and Jio have a good history with mutual understanding.
