After Reliance Communications-Aircel Rs 65,000 crore merger, talks underway with Russia’s Sistema. Here are the details

India’s fourth-largest phone company, in terms of customers and revenue, was born after Reliance Communications announced its merger with Aircel in a Rs 65,000 crore deal.

Once the merger formalities are over, the merged entity will also get on board a third entity by diluting about 25% equity to raise around Rs 6,000 crore.

RCom-Aircel are planning to make Russia's Sistema a part of it, which already holds 10% in RCom. Once a third partner enters, Reliance and Aircel will dilute stakes on a proportional basis.

"Together with our partners, Maxis Communications Bhd (MCB), we are delighted to have taken the lead in consolidation of the Indian telecom sector," said Reliance Group Chairman Anil Ambani.

RCom and Aircel will have equal board representation. Sources told ET Ambani and Maxis Group promoter T Ananda Krishnan will stay out of this to ensure that an independent professional team runs the company under board supervision.

However, the new brand name and CEO’s name haven’t been decided as yet.

“Both Aircel and RCom will dilute and eventually plan to hold around 37.5% each while Sistema can potentially own 25% in the mega alliance. The entity will also be separately listed in a few years," an executive aware of the plans told ET.

ET reported RCom will transfer Rs 20,000 crore of its debt into the new combine that includes Rs 14,000 crore of long-term debt and Rs 6,000 crore of installments payable to the Department of Telecommunications (DoT) over 10 years for spectrum purchases by both RCom and Sistema. Aircel will also transfer Rs 14,000 crore of its debt to the entity.

"This deal further reinforces MCB's commitment to India. Since acquiring Aircel in 2006, MCB has invested in excess of Rs 35,000 crore ($5.2 billion) into Aircel, making this one of the largest foreign investments into India, not only in the telecom industry but across all sectors," a Maxis spokesperson told ET.