RCom gets CCI nod for acquisition of Sistema
Mayuresh Deshmukh / 22 Feb 2016
Reliance Communications (RCom) informed stock exchanges on Monday that fair trade regulator Competition Commission of India (CCI) has given its nod to its proposed deal to acquire Sistema Shyam Teleservices Ltd (SSTL).
India's fourth largest wireless carrier Reliance Communications (RCom) informed stock exchanges on Monday that fair trade regulator Competition Commission of India (CCI) has given its nod to its proposed deal to acquire Russian conglomerate Sistema’s Indian telecom unit, Sistema Shyam Teleservices Ltd (SSTL) that operates under the MTS brand. SSTL offers mobile telephony services under the MTS brand across nine telecom circles in the country.
In November, RCom announced acquisition of Sistema’s Indian telecom unit in an all-stock deal that will create an operator with 118 million subscribers. As per the deal, SSTL will hold about 10 per cent stake in RCom and pay off its existing debt before closing the deal.
The deal will give RCom access to spectrum or airwaves in the 850 Mega Hearts (MHz) band that can be used for 4G services which it plans to start by the year-end. Also, it will be able to extend the validity of its license by 12 years in eight high revenue-generating circles of Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West) and West Bengal.
While SSTL will pay off its existing debt, RCom will assume the liability to pay the government installments for SSTL’s spectrum, amounting to Rs 392 crore per annum for the next 10 years.
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 50.80, an increase of 0.69 per cent from the previous close.
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