Cites legal and regulatory hurdles as reasons to pull out of the deal.
New Delhi: Anil Ambani-led telecom operator Reliance Communications (RCom) on Sunday called off its merger talk with Aircel over “legal and regulatory uncertainties”.
Its merger with Aircel and tower sale was expected to bring down RCom’s debt by more than half. RCom said that its board on Sunday considered alternate plans for debt reduction.
RCom and Aircel had signed binding agreements in September 2016 for the merger of RCom’s mobile businesses with Aircel.
“Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction,” RCom said.
“Unprecedented competitive intensity in the Indian telecom sector, together with fresh policy directives adversely impacting bank financing for this sector, have also seriously affected the industry dynamics. As a result of the various factors aforesaid, the merger agreement has lapsed. The Board approved the same,” said RCom.
CBI is also probing alleged irregularities in the FIPB clearance in the Aircel-Maxis deal.
The agency has already sort clarification from then finance minister P. Chidambaram and has now summoned his son Karti Chidambaram for questioning on October 4.
RCom said that board of directors “reviewed the ongoing strategic transformation programme, and considered alternate plans for debt reduction.”
It said that RCom will continue to implement its plans for monetisation of its Tower and Fiber assets, as already announced.
RCom is undergoing strategic debt restructuring under which banks have stopped collecting interest for 210 days that end in December and after which they have right to convert debt into equity.
Lender banks received shareholders’ approval to convert debt into equity at the company’s 13th annual general meeting on September 26.
“The company continues to be under a standstill period till December 2018 and expects to complete the SDR process as per applicable guidelines. Shareholders of the company at the annual general meeting held on September 26, 2017 have already approved issuance of equity shares to lenders by conversion of loans,” said the company.
It said that the board decided that RCom will evaluate an alternate plan for its mobile business, through optimisation of its spectrum portfolio.