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RCom, Aircel merger called off due to uncertain regulatory environment

In a development that could further hurt Anil Ambani-led Reliance Communications, the merger between Reliance Communications and Aircel has been called off. The decision regarding the same was announced today. In a statement submitted to the Bombay Stock Exchange (BSE), Reliance Communications said that the decision to call of the merger with Aircel has been taken in view of the uncertainties present in the regulatory environment. “Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction,” the statement read. RCom said the merger being called off, however, should not be taken as a setback. The Company said that it is working on an alternative plan to revive its failing business. The company said that the new plan will be focused on 4G-based strategy, which would be most suited to the emerging technology benchmark and customer preferences in the market.

However, there is no change in the planned merging of the mobile business of Sistema Shyam Teleservices (MTS India) with RCom. This deal will be completed by the end of October. In a statement, RCom said that competition has increased significantly in the telecom sector. Coupled with new policy directives, it is adversely impacting the ability of telecom firms to borrow funds from banks. Due to these reasons, the merger with Aircel has been called off, RCom said. The company is currently trying to raise funds through optimization of spectrum portfolio and sale of its tower and fiber assets and real estate. These are expected to generate around Rs 25,000 crore for the cash-strapped company.

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