RCom shakes hands with Aircel

Reliance Communication (RCom) informed stock exchanges that it has entered into non-binding discussion with Aircel Ltd. for merger of its wireless business. RCom entered into a 90-day exclusivity period with Maxis Communications Berhad (MCB) and Sindya Securities and Investments Private Limited, the shareholders of Aircel for talks on merger. 

The discussion is to mutually derive the expected substantial benefits of in country consolidation, including opex and capex synergies and revenue enhancement. RCom is India's fourth and Aircel is India's fifth largest wireless carrier. After merger, the two can become the second largest wireless carrier of the country. Combinedly both will have approximately 13.68 per cent of total share of subscribers base. Aircel has Pan India operation in wireless communication and RCom has its footprints all over India except in North Eastern state.

On the financial front, the total operating revenue of company for FY15 stands at Rs 21770 crores compared to Rs 20940 crores in FY14 an increase of 2.50 per cent. The EBITDA is at Rs 7190 crores an increase of 8.23 per cent and EBITDA margin stands at 33 per cent for FY15 compared to 31.28 percent same period last year. Net profit of the company is stand at Rs.620 crores compared to Rs 1137 crores in FY14 a decrease of 45.47 percent. The decrease in net profit is on the back of huge depreciation and finance cost. The total debt RCom looking for reducing stands at Rs 31493 crores for FY15 which is 35 per cent of the total assets of the company. 

The Stock of RCom is trading at Rs 85.70, an increase of 2.39 per cent from the previous close.

RCom is India's foremost and integrated telecommunications service provider. The Company has a customer base of over 118 million including over 2.6 million individual overseas retail customers. It owns and operates the world's largest next generation IP enabled connectivity infrastructure.

Aircel is a pan India operator with a presence across 23 circles. The company offers voice & data services ranging from postpaid and prepaid plans, 2G and 3G services, Broadband Wireless Access (BWA), Long Term Evolution (LTE) to Value-Added-Services (VAS).