New Delhi: Reliance Communications today said Bombay High Court has approved its deal to acquire Russian conglomerate Sistema's Indian telecom unit, Sistema Shyam Teleservices, that operates under the MTS brand.
"Hon'ble High Court of Judicature at Bombay has today sanctioned the Scheme of Arrangement between the company and Sistema Shyam Teleservices Ltd (SSTL) and their respective shareholders and creditors (Scheme) pursuant to the petition filed by the company," RCom said in a filing to the BSE.
It added that the Rajasthan High Court has already sanctioned the scheme on September 30, 2016.
In November, RCom announced acquisition of Sistema's Indian telecom unit in an all-stock deal, valued at around USD 690 million (Rs 4,500 crore), that will create an operator with 118 million subscribers.
As per the deal, SSTL will hold about 10 per cent stake in RCom and pay off its existing debt before closing the deal.
Russian tycoon Vladimir Evtushenkov-controlled AFK Sistema currently holds 56.68 per cent stake in SSTL, while the Russian government owns 17.14 per cent interest.
Shyam Group has 23.98 per cent stake and the rest is owned by small investors.
SSTL offers mobile telephony services under the MTS brand across nine telecom circles in the country.
The deal will give RCom access to spectrum or airwaves in the 850 Mhz band that can be used for 4G services which it plans to start by the year-end.
Also, it will be able to extend the validity of its licence by 12 years in eight high revenue-generating circles of Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, UP (West) and West Bengal.
While SSTL will pay off its existing debt, RCom will assume the liability to pay the government instalments for SSTL's spectrum, amounting to Rs 392 crore per annum for the next 10 years.
Sistema had ventured into the Indian telecom space in 2007 when it bought 10 per cent stake in Shyam Telelink by paying USD 11.4 million. The stake was raised subsequently.
The merger will not just help RCom compete with the existing players but consolidate its position in the industry that is facing intense competition in the backdrop of launch of Mukesh Ambani-led Reliance Jio service.