Reliance Communications Ltd got another blow on Sunday after its merger with Aircel was called off with mutual consent. The two telecoms have been in agreement since last year for merging RCom’s mobile business with smaller rival Aircel. However, the announcement now again raises doubts over whether RCom is able to repay its massive debts. Also Read - Reliance JioFiber plans with free Voot Select subscription: Check plans, price, and other benefitsAlso Read - JioFiber broadband plans with free Netflix subscription: Check plans, price, data benefits, more
According to RCom’s official statement, the merger has been called off on the account of ‘legal and regulatory uncertainties’. Led by Chairman Anil Ambani, RCom has an estimated debt of Rs 250 billion, which it planned to pay off by merging its wireless business with Aircel. The two signed binding agreements in September 2016. The merger was approved by Securities and Exchange Board of India (SEBI) and Competition Commission of India (CCI) board both. Also Read - How to get free Netflix subscription: Just follow these steps
Ambani at the recent AGM stated that RCom will bring in new plans for debt reduction, while also focussing on 4G and spectrum optimization. The company says, adopting to 4G focused strategies will allow it to eliminate the loss-making segments of RCom’s holistic business portfolio. ALSO READ: Reliance Communications might sack 380 employees for below-par performance
It is no secret that RCom has hit by Reliance Jio‘s disruptive entry in Indian telecom scene as well. Reliance Jio’s Chairman Mukesh Ambani is Anil Ambani’s elder brother, and India’s richest man. The elder Ambani kicked off Reliance Jio 4G services last year in September and since then has gained an unprecedented number of consumers in a very short time with free voice calls and unlimited data plans. Following which, other established telcos like Bharti Airtel, Vodafone India, Idea Cellular and even the state-run BSNL had to take to aggressive business strategies to keep up with the competition. ALSO READ: Reliance Jio confirms to complete JioPhone delivery by Diwali
RCom states that the current competitive scenario in Indian telecom sector has changed industry dynamics and indirectly affected banks from financing telecom operators. Last month, a local business unit of Sweden-based Ericsson filed a plea against RCom on the account of bankruptcy. After the Aircel merger lapse, RCom said in a statement that it would monetize its spectrum, currently valued at Rs 19,000 crores, through trading and sharing arrangements. Further, it will continue to monetize of its tower and fiber. The company is at ‘unique advantage’ for it hold spectrum sharing and ICR Agreements with Reliance Jio, says RCom.