Billionaire Anil Ambani in Wireless Merger Talks With Aircel

  • Reliance Communications has 90-day exclusivity on discussions
  • Deal to exclude Reliance's tower and optical fibre assets

Billionaire Anil Ambani’s Reliance Communications Ltd. is in talks to merge with smaller wireless carrier Aircel Ltd. in the latest sign that that deal-making in India’s telecommunications industry is heating up.

Reliance is considering the "potential combination" of its wireless operations with those of Aircel, it said in an exchange filing. Though the statement didn’t provide financial details, the company has 90 days to have exclusive talks with Aircel owners -- Malaysia’s Maxis Communications Bhd and Sindya Securities & Investments Pvt.

India’s mobile-phone industry, the world’s second largest by subscribers, is ripe for consolidation as competition among the nation’s dozen carriers have driven down phone rates to levels rarely seen in other countries. Should Ambani succeed in buying closely-held Aircel and AFK Sistema’s Indian wireless unit -- a deal announced last month -- Reliance could nearly double its number of subscribers to more than 200 million.

Reliance Communications shares climbed 2.2 percent to 85.65 rupees in Mumbai, the biggest gain in more than a week. The company has been the top performer in the 13-member S&P BSE Telecom Index in the past month.

As of the end of September, Aircel was the fifth-largest operator in India with 84 million subscribers, trailing Reliance, which had almost 110 million subscribers. Sistema had 8.36 million users.

The Aircel deal will be subject to regulatory, shareholder and other third-party approvals, according to Tuesday’s statement.

The merger discussions exclude Reliance’s towers and fiber-optic infrastructure assets since they are being sold off. The company said this month that it’s in talks to sell its cellular towers to private equity firms Tillman Global Holdings LLC and TPG Asia Inc. by mid-January.

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