RCom, Aircel merger deal on sticky ground

NEW DELHI: The proposed merger of Reliance Communications wireless business and Aircel is clouded with more uncertainty with the Department of Telecommunications setting the Supreme Court's go-ahead a condition for it to approve the deal. The department, though, is close to clearing the merger of Sistema's Indian business with RCom, people aware of the process said.

The SC had earlier this year threatened to cancel Aircel's licences if the top executives of its Malaysian parent, Maxis Berhad, continued to evade Indian courts over a case where they were accused of bribing politicians and officials. Cancellation of the licences could block the deal. DoT doesn't want to risk it clearing the merger and then the court making an adverse order.

"The Supreme Court will have to give a final say, only then can we give a go-ahead," said a senior DoT official aware of the matter.

DoT stated its position in an affidavit filed before the National Company Law Tribunal (NCLT), which is considering the merger proposal.

Both companies have already received approvals from the Competition Commission of India (CCI), stock exchanges and shareholders.

The companies plan to combine their wireless businesses into an equally owned joint venture that will create a stronger No. 4 operator in India's intensely competitive telecom market. This is also one of the key deals that debt-laden RCom is sewing together in an effort to stop creditors from classifying its loans as nonperforming.

The merger will help it transfer Rs 14,000 crore, or close to a third, of its liabilities to the books of the JV. "It is humbly submitted that petitioners may be directed to take suitable permissions from the Hon-'ble Supreme Court before submission of the proposed scheme of arrangement," DoT said in the affidavit, dated April 28, before the Mumbai bench of the tribunal. ET has seen a copy of the affidavit.

Reliance Communications (RCOM)