RCOM calls off Aircel merger

Anil Ambhani owned Reliance Communication and Aircel singed agreements last year (September 2016) for the merger of RCOM's struggling mobile businesses with Aircel. RCOM was expecting a significant debt reduction, once the merger was completed with Aircel. However, that's not happening anymore because, both companies have terminated the deal.

RCOM's board of directors also reviewed the transformation programme and considered alternate plan to reduce debt of its mobile business. This will be done by optimizing spectrum portfolio and focusing on 4G technology, along with selling real estate, tower and fiber business, which is expected to generate proceeds of over Rs. 25,000 crore for debt reduction. RCom is in debt of about Rs 46,000 crore.

The company said that 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, the merger agreement lapsed.

RCOM has been losing its market share, since the entry of elder brother Mukesh Ambani's Reliance Jio into the telecom sector, which triggered price wars among telecom operators. It added that unlimited free voice calls and irrational pricing by various telecom operators to gain customers have destroyed profitability of 2G/3G mobile business.

Going forward RCOM will focus on domestic and overseas B2B business, which include enterprise, carrier, internet data and global submarine cable network. 

Source