Under government pressure, incumbent NTT Docomo plans service price cuts
RCom arranges to buy SSTL in all-stock deal
India's Reliance Communications has secured a deal to acquire and merge with Sistema Shyam Teleservices (SSTL) in exchange for a 10% stake in the combined company.
Under the deal, Sistema Shyam's owners will acquire only the equity stake in the merged company, but no board representation or veto powers, the Economic Times reported, citing a source involved in the negotiations.
The source suggested that the value of the deal would be close to 45 billion rupees ($686 million). A 10% stake in RCom is currently worth around $290 million, and the operator has also agreed to cover payments for mobile airwaves due to be allotted to SSTL's current parent, Russsia's Sistema.
If it goes ahead the merger between the two companies would be the first significant example of telecom market consolidation since 2009.
Analysts believe consolidation could help alleviate the price pressure in India's intensely competitive mobile sector.
The deal will meanwhile give RCom access to valuable 850-MHz 4G spectrum, as well as an existing mobile business serving around 9 million subscribers across nine of India's 22 telecom circles. SSTL offers services under the MTS India brand.