RCom calls off merger deal with Aircel

The biggest deal in domestic telecom sector has been broken. Telecom firms Reliance Communications and Aircel canceled a mobile merger agreement. Reliance Communications (ARCOM), led by Anil Ambani, has announced that it will step down from the merger agreement with Aircel. In last year of September, the two companies signed an agreement to establish a firm worth over Rs 65,000 crore by merging RCom with Aircel. However, with regards to legal implications, policy uncertainty by regulatory agencies are the reasons for canceling their contract. RCom made it clear that delay in availability of proposed transaction licenses is one of the reasons. “There is a huge competition in Indian telecom sector. Government policies have adversely impacted loans from banks for these companies. In addition, the industry layout has changed significantly. In addition to the above mentioned reasons, we have canceled the merger agreement. The board also approved this, “RCom said. Had the merger gone through, it would have created India’s third-largest telecom provider with 175 million subscribers.

As Anil Ambani is exploring other alternatives to reduce debt of 42,000 crore, through a possible sale of spectrum, tower and real estate assets as the six-month moratorium allowed by the lenders to repay 25,000 crore of outstanding loans ends on December 31.

The proposed deal with Aircel signed last September and the sale of its tower assets to Brookfield were together expected to reduce RCom’s debt by 60%. RCom had reported a net loss of 1,796 crore in FY17.


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