DoT allows RCom to take over SSTL with ‘high value’ spectrum

NEW DELHI: The Department of Telecom (DoT) has approved Reliance Communications’ proposal to take over Sistema Shyam Teleservices that will help RCom renegotiate its terms with Reliance Jio, which is using the same spectrum that it will get from SSTL. RCom is led by Anil Ambani while RJio is led by his elder brother Mukesh Ambani Chairman Reliance Group. Shares of RCom closed at Rs 17.7 a unit, up by 7.6 per cent compared to the previous close on the BSE on Monday. 

“It opens up two opportunities for RCom: either they can sell this spectrum to RJio and recover about Rs 7,000 crore to pay off its debt or it can lease out the spectrum for half the amount and get paid royalty and revenue per subscriber. This will in discussion in a month’s time,” an analyst advising the deal of RCom-SSTL merger told Express.RCom will get 3.3 million SSTL customers — 2.2 million were on data services and 1.1million were on wi-fi. 

The move will also help reduce the RCom debt of Rs 46,700 crore. “It is good news after the Aircel acquisition did not work out for us… We will close the deal in next 15-20 days,” a senior RCom official said. SSTL will get 10 per cent stake in RCom as per the terms of the deal.

RCom will acquire 30 MHz of the most valuable and superior 800/850 MHz band spectrum (highly suitable for 4G LTE that provides faster data speed), which is estimated to value Rs 7,500 crore since its validity is of 16 years till 2033, a senior official in DoT explained.

According to a note from DoT to RCom, SSTL and secretary, Telecom Regulatory Authority of India dated October 20, 2017, reviewed by Express, RCom will offer telecom services in Karnataka, Kerala, Tamil Nadu, Delhi, Gujarat, Kolkatta, West Bengal and Uttar Pradesh (West). 

MTS, Systema’s brand in India, will continue and subscribers will get services from the date of acquisition till 2021 and 2033, RCom said. The firm has assumed the liability to pay Rs 390 crore per annum for the next eight years to DoT, which is due for spectrum purchased by SSTL, a company statement clarified.