R-Com, Jio strengthen family link

Mumbai, Sept. 27: In an indication of good relations between the two Ambani brothers, younger sibling Anil today said the association between Reliance Jio Infocomm and Reliance Communications had resulted in a "virtual merger" of the two companies.

"Mukesh and Anil Ambani are two brothers working relentlessly to fulfil the dream of Dhirubhai Ambani and this association has accomplished a virtual merger between R-Com and Jio,'' R-Com chairman Anil Ambani told shareholders at the company's AGM here today.

Differences between the brothers had led to the split of the Reliance empire in 2005. However, their relations have improved with both R-Com and Jio entering into pacts on spectrum and infrastructure sharing.

Ambani said R-Com was looking to cut debt by up to 75 per cent over the next year. As of June 30, the telecom company had a net debt of Rs 42,071 crore.

"The target is to reduce debt by 75 per cent within a year and once the ongoing merger processes of MTS and Aircel with R-Com are complete, it will help to reduce debt by Rs 20,000 crore."

Earlier this month, R-Com and Maxis Communications Berhad, promoters of Aircel Limited, had sealed a merger deal that would create the country's third-largest telecom player by subscribers.

R-Com had earlier acquired the Indian unit of Russian conglomerate Sistema, known by its MTS brand, in an all-stock deal.

Ambani said R-Com would be among the top operators in 12 circles after the Aircel merger. He added that the three-way amalgamation was the largest consolidation in the domestic telecom industry, creating a formidable operator with the second-largest holder of spectrum aggregating 448MHz across the 850, 900, 1,800 and 2,100MHz bands. It will also make R-Com one of the largest and valuable corporate houses with an asset base of over Rs 65,000 crore and net worth of Rs 35,000 crore.

The merger is expected to bring down R-Com's debt by Rs 20,000 crore, while Aircel's debt is projected to come down by Rs 4,000 crore from Rs 23,436 crore.

Ambani said the company had sufficient spectrum of its own for 2G 3G and 4G as well as spectrum from Reliance Jio through trading and sharing arrangements, which will be beefed up further once the merger is complete.

Expressing optimism over the future of R-Com and its market position, Ambani said other operators might have to spend heavily on spectrum to survive. On its 4G services, he said within 90 days of its launch, the company had crossed more than a million customers using more than 1GB data per month.