Reliance Communications (RCom) has announced that it is in talks to acquire Aircel. The new development would empower Anil Ambani-run company to rival the India’s largest telecom giant Bharti Airtel and Vodafone.
Presently, RCom is the fourth-biggest telecom operator in the country following Airtel, Vodafone and Idea Cellular, whereas Aircel holds the fifth position. The merge would help the operator reaching the number three position by capturing about 20 percent of the country’s total telecom market that so far has 10 players.
Chennai-headquartered Aircel has a subscriber base of over 83 million subscribers in the country; leading particularly in Tamil Naidu. Malaysia’s Maxis Communications holds a majority stake in the company that was founded back in 1999 by entrepreneur C Sivasankaran.
Both the operators have not yet revealed any details about their merging plans. However, it would help RCom expanding its market across the country. The operator is predicted to have nearly 150 million subscribers and a majority of spectrum holdings through the new deal. Also, it will support the launch of Mukesh Ambani-formed Reliance Jio that aimed to roll out pan-India 4G services in the coming years.
The press statement sent by RCom says that the two telecom operators have entered into a 90-day exclusivity period and the talks are non-binding as well as subject to due diligence and regulatory clearances. Further, the deal will not include the tower and optical fibre assets owned by RCom.
Last month, RCom agreed to acquire Sistema Shyam Teleservices (SSTL) that runs MTS in India. That deal was the operator’s first major attempt to enhance its network in the country.
Unlike the deal with SSTL, the talks with Aircel is likely impact on the overall presence of the Indian telecom sector. Analysts believe that both the operators will offer upgraded services and improved networks to their subscribers through the new entity. But at the same time, they are forcasting that RCom would double its debt by acquiring the operator that already has debt of Rs. 26,000 crore.
This isn’t the first time when the younger Ambani brother is looking to uplift his business by adding resources from Chennai’s operator. RCom last year partnered with Aircel to start offering nation-wide 3G services. Both the operators are also actively participating in Facebook’s Internet.org initiative that relaunched as Free Basics.