‘RCom has backup plans in place for the delayed Sistema merger’

Rajesh Kurup Mumbai | Updated on January 10, 2018 Published on September 26, 2017

Reliance Group Chairman Anil Ambani

Anil Ambani says a minority shareholder is ‘solely responsible’ for the stalling

A “frivolous” petition filed by a shareholder has resulted in delaying the merger of Reliance Communications and Sistema Shyam TeleServices Ltd (SSTL) by nearly a year, even as the operator has backup plans in place.

“Mehta is solely responsible for delaying the merger between SSTL and RCom, where we were gaining 4G spectrum. Is it motivated, is this corporate rivalry? I don’t know, but other shareholders had to bear the cost,” Reliance Group Chairman Anil Ambani told shareholders at the company’s AGM on Tuesday.

Ambani was referring to the petition filed by a minority shareholder, Shailesh Mehta, who had objected to the merger stating shareholders’ interest may be impacted. Mehta has 10 shares in RCom.

In November 2015, Russia’s public diversified holding company Sistema had announced plans to merge its Indian telecom subsidiary SSTL with RCom. Following the deal, RCom will get validity of its spectrum across eight circles — Delhi, Gujarat, Kolkata, Karnataka, Tamil Nadu and Kerala — extended till financial year 2033. RCom’s spectrum in these circles is to expire in 2021.

Following the deal, RCom will also issue a 10 per cent stake to SSTL in an all-stock deal.

‘Multiple options’

However, RCom has backup plans in place. “We have more than one plan. There are multiple options to ensure we have appropriate solutions, which may not be in the public domain,” Ambani, said, but declined to divulge them citing “intense corporate rivalry in the sector”.

The company is also in discussions with lenders, and will find a solution in the course of this financial year, he said, adding RCom has the “full support” of the company’s lenders, both Indian and Chinese.

Petition by Ericsson

Meanwhile, the National Company Law Tribunal (NCLT), which was hearing a petition filed Swedish telecom equipment manufacturer Ericsson, has differed the case to October 6. On September 11, Ericsson had filed for insolvency at the NCLT under the newly formed Insolvency and Bankruptcy Code to recover ₹1,150 crore from RCom for services and equipment the former had earlier supplied.

Ambani said the wireless sector in the country is in the “Intensive Cardiac Care Unit”, with it requiring a minimum of ₹ 1 lakh crore a year to expand and maintain quality of service. In April, the RBI had cautioned banks to be careful while lending to the telecom sector.

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Published on September 26, 2017
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