Sistema company to take 10% stake in RCom after MTS India merger completed

Reliance Communications (RCom) has completed its takeover of MTS India, giving it licences and extra spectrum for 4G.

MTS India was owned by Sistema Shyam Teleservices Ltd (SSTL) in which the Russian industrial group Sistema has a 57% stake. Now as part of the deal SSTL has a 10% stake in RCom, which also owns Global Carrier Xchange (GCX), the subsea cable and data centre operator.

SSTL said: “In accordance with the approved transaction structure, SSTL’s minority shareholders will have the right to convert SSTL shares into RCom shares in proportion to their equity stakes in SSTL as part of a tender offer to be announced by the end of January 2018.”

Sistema is also the major shareholder in Russia’s MTS business, though that is separately managed.

Sistema president Mikhail Shamolin said: “We welcome the completion of this deal, which marks another chapter in consolidation of the Indian telecom sector. As a shareholder of RCom we are confident that this merger will help strengthen the operator’s position in the industry and deliver on its strategic plans.”

But RCom is still heavily indebted to the tune of 450 billion rupees ($6.8 billion) and is expected to announce a closedown of its 2G mobile phone services and a focus on 3G and 4G data services.

It is also trying to find a buyer for its tower business. That was due to go to a Canadian company, Brookfield, which is no longer interested since RCom dropped a second merger, with Aircel, last month.

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