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The telecom ministry has finally cleared the merger between Anil- Ambani owned Reliance Communications and Sistema Shyam Telecom Limited (SSTL), ET reported.
According to the report, the ministry has given its approval on October 20.
The deal, which is valued at Rs 5,000 crore will help RCOM to acquire SSTL's 800 / 850 MHz band spectrum, ideally suited for 4G LTE services.
This will extend the validity of RCOM's spectrum in 800 / 850 MHz bands in 8 important circles by a period of 12 years from 2021 till 2033 (Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West) and West Bengal).
As result of the demerger, SSTL will acquire and hold a 10 percent equity stake in RCOM and, later will assume the liability to pay the DoT installments for SSTL's spectrum, amounting to Rs. 392 crore per annum for the next 10 years.
Meanwhile, the RCom has recently called off its merger with Aircel due to legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction.
The unprecedented competitive intensity in the Indian telecom sector, together with fresh policy directives adversely impacting bank financing for this sector, have also seriously affected industry dynamics. As a result of the various factors aforesaid, the merger agreement has lapsed. The Board approved the same, RCom said.
In a meeting with Board of Directors, RCom reviewed the ongoing strategic transformation programme and considered alternate plans for debt reduction.
The merger of a mobile business of RCom and Aircel lapses with mutual consent Rcom and Aircel Limited (Aircel) had signed binding agreements in September 2016 for the merger of Rcom's mobile businesses with Aircel, the company added.