Anil Ambani-led Reliance Group's telecom firm Reliance Communications Ltd (RCOM) said on Monday that it is in exclusive talks with Russian firm AFK Sistema to acquire and merge its Indian telecom business Sistema Shyam TeleServices Ltd through a stock swap.
This is subject to due diligence, definitive documentation and approvals and there is no certainty that any transaction will result, the company said in a stock market disclosure.
Sistema Shyam TeleServices is a joint venture between Sistema, the Russian Federation and the Shyam Group of India. Sistema and the Russian government together own nearly 74 per cent in the company which operates its telecom services under the MTS brand. Sistema itself owns around 56.7 per cent stake in the unit.
It has operations in Rajasthan, Delhi, Gujarat, Uttar Pradesh (West), Kolkata, West Bengal, Kerala, Tamil Nadu and Karnataka telecom circles offering CDMA technology based telecom services. It is especially pushing its non-voice or data services in the country.
Its revenues grew 10 per cent to Rs 1,347.2 crore million in 2014 and it clocked 12 per cent rise in Q1 ended March 31, 2015 to Rs 357.8 crore, mainly on account of data revenue growth. The company’s data card subscriber base for the quarter was up 9.4 per cent to 1.8 million subscribers and non-voice revenues contributed 51.1 per cent of total quarterly revenues, the highest percentage in the industry.
Reliance Communications has been looking to consolidate its own business and is separately looking to sell non-core assets to reduce debt. Recently, it invited proposal from investments banks to monetise assets of its tower unit Reliance Infratel within the current year ending March 31, 2016.
On Monday, shares of Reliance Communications closed at Rs 58.85 each, up 0.60 per cent on BSE in a strong Mumbai market.