Billionaire Ambani Merges India Mobile Arm With Aircel

  • Merged entity to rank among top 4 in India by revenue, users
  • Aircel, Maxis to infuse further equity after merger approved

Anil Ambani.

Photographer: Abhijit Bhatlekar/Mint via Getty Images

Billionaire Anil Ambani’s Reliance Communications Ltd. will merge with smaller wireless carrier Aircel Ltd. in the latest consolidation in India’s telecommunications industry.

The new entity will close the gap in terms of subscriber base with market leaders Bharti Airtel Ltd. and Vodafone India Ltd. When the deal is closed in 2017, Reliance Communications will reduce its debt by 200 billion rupees ($3 billion), or more than 40 percent of its total, and Aircel by 40 billion rupees, according to a stock exchange filing. Both Reliance and Maxis Communications Bhd., which controls Aircel’s parent, will have equal stake and representation in the entity.

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. By combining with Aircel, Ambani’s Reliance Communications could nearly double its number of subscribers to about 200 million.

Reliance Communications shares rose 2.8 percent to 51.15 rupees at the close in Mumbai. The shares have declined 42 percent this year.

As of the end of May, Aircel was the fifth-largest operator in India with 8.5 percent market share, trailing Reliance, which had 9.8 percent. Sistema, which Reliance earlier merged with, had 0.7 percent share.

The deal will be subject to regulatory, shareholder and other third-party approvals, according to the statement. Goldman Sachs, SBI Capital Markets, Standard Chartered Bank, Strategy&, A.T. Kearney, BMR Advisors, PWC, S.R. Batliboi & Co. LLP, EY, KPMG, Khaitan & Co., JSA Law, Kirkland & Ellis, and Slaughter & May, were advisers on the transaction.

Earlier this month, Ambani’s older brother Mukesh, India’s richest man, entered the industry with his Reliance Jio Infocomm Ltd. The fourth-generation only service, which promises free voice calls for life, is offering free trials till the end of the year.

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