RCom in merger talks with Sistema ShyamVia Financial Chronicle | Jun 16, 2015Reliance Communications (RCOM) informed BSE on Monday that it has entered into exclusive discussions with AFK Sistema for a potential merger between the Anil Ambani-led group firm and Sistema Shyam TeleServices (SSTL), the company that offers telecom services under the MTS brand in India. The merger, if it happens, would be through a stock swap. The discussions are indicative and non-binding in nature, and remain subject to due diligence, definitive documentation and approvals, as may be necessary. There is no certainty that any transaction will result, RCOM said in the notification. Sistema has made the same notification on London Stock Exchange. SSTL is a joint venture between Russias Sistema and the Shyam group in India. The acquisition of SSTL would give RCOM the much-needed contiguity in spectrum across the nine circles. The spectrum in the 900MHz band was available (in the recently concluded auctions) only because the 20-year-long licences of certain telecom operators are set to expire in 2015-2016. Spectrum in the 1800MHz band is currently non-contiguous and partially available across licensed service areas, said an analyst at India Ratings and Research.SSTL offers CDMA services mobile telephony and mobile broadband under the MTS brand in India. As of March 31, the company had over 88 lakh subscribers across nine circles, including Delhi, Rajasthan, Karnataka, Tamil Nadu and West Bengal. It had 0.9 percent share in the wireless telephony market. On the other hand, RCom has pan-India presence covering 21,000 cities and towns and over 4 lakh villages. It provides 3G services in 13 circles. The company offers both wireless and wireline services in both GSM and CDMA platforms. As of March 31, it had 11.29 percent market share and 10.94 crore subscribers. The RCom-SSTL merger will be the first reasonably sized merger in the telecom sector. Last February, Bharti Airtel announced it would acquire Loop Mobile in Mumbai circle to bring together Loops 2G/EDGE network and Airtels 2G and 3G network. The deal was said to be worth about Rs 700 crore. The Indian market has 12 operators in the wireless mobile telephony segment with Airtel leading the pack with over 23 percent share.