BIG DEAL

Ambani after Ambani: After Mukesh launches Jio, Anil’s R-Com merges mobile business with Aircel

Quartz india
Quartz india

Days after Mukesh Ambani, India’s richest man, launched telecom behemoth Reliance Jio, younger brother Anil Ambani unveiled his big move in the sector.

Reliance Communications (R-Com), the telecom company owned by Anil, has merged its wireless business with smaller rival Aircel, which is a part of the Malaysian Maxis group.

The merger is the “largest-ever consolidation in the Indian telecom sector,” R-Com said in a statement (pdf) on Sept. 14. The new entity will be India’s third-biggest cellular carrier by subscribers. Both companies will hold an equal stake in the new firm. The talks of the merger began in December this year.

In the period between January 2016 and March 2016, R-Com had a revenue market share of 4.96% compared to Aircel’s 5.59%.

The merger will cut down the debt of both firms. R-Com’s debt will reduce by Rs20,000 crore (40% of the current debt) while Aircel’s borrowings would drop by Rs 4,000 crore, the statement said.

The merger has intensified the battle in the world’s second-biggest telecom market. Jio’s launch has disrupted the sector by offering super fast internet service at throwaway prices and free voice-calls, leaving most other operators scrambling to retain customers.

Anil’s move will strengthen R-Com’s 4G play. The company already has spectrum-sharing arrangements with Jio.

“We expect this combination to create substantial long-term value for shareholders of both, RCOM and MCB, given the benefits of the wide-ranging spectrum portfolio and significant revenue and cost synergies,” Anil Ambani said in a statement.

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