India's Reliance Communications (RCom) has secured approval from the Department of Telecom to merge with Sistema Shyam Teleservices (SSTL), operator of the MTS India brand.
The telecoms ministry has granted final approval for the share swap deal, the Indian Expressreported.
Under the terms of the merger agreement, SSTL shareholders will receive a 10% stake in RCom. RCom will meanwhile take on SSTL's spectrum installment payment obligations, which amount to 3.9 billion rupees ($59.9 million) per year for eight years.
RCom will in return acquire around 2 million new customers, as well as 30 MHz of 800-MHz spectrum in eight of India's 22 telecoms circles including Delhi.
The operator projects that the merger will contribute additional annual revenue of around 7 billion rupees. RCom reported total revenue of 35.9 billion rupees for the year ending in June, down 33% year-on-year.
RCom had also been pursuing a merger with Aircel as part of the wave of consolidation sweeping India's mobile market, but this deal collapsed recently due to regulatory uncertainty and opposition from some of the operator's creditors. The operator is seeking to reduce its roughly $6.8 billion in debt by around $3 billion, and may pursue an asset fire sale to achieve this goal.