New Delhi: Shareholders of telecom operator Sistema Shyam Teleservices (SSTL), which runs the MTS brand, today approved the merger of the company with Reliance Communications in a meeting convened by the Rajasthan High Court.
"SSTL shareholders have approved the merger scheme with RCom at the meeting today," a source privy to the development told PTI.
When contacted, an SSTL spokesperson said the meeting in Jaipur was convened by the high court to seek approval of the SSTL shareholders to merge the company with Reliance Communications.
"As per initial indications, members of the company have duly approved the merger process through voting by way of poll at the meeting and through e-voting. However, a formal declaration can only be made after all the ballot votes have been counted," the spokesperson said.
Queried further, the spokesman said the result of the meeting will be announced on March 21.
Earlier this month, shareholders of RCom too had approved the merger scheme.
The RCom-SSTL merger deal has already been cleared by the Competition Commission of India and Sebi. Now, it needs to be cleared by the Rajasthan High Court and the Bombay High Court.
Once approval from these courts comes by, RCom will approach the Department of Telecom for final paperwork.
The deal between RCom and SSTL is valued at around USD 690 million (Rs 4,500 crore) and is expected to close in the second quarter of 2016.
SSTL will hold about 10 per cent stake in the new entity and pay off its existing debt before completing the deal.
While the two companies did not divulge financial details of the deal, an industry source said SSTL's equity stake has been valued at USD 290-300 million at current prices.
While SSTL will pay off its existing USD 500 million debt, RCom will assume the liability to pay the government instalments for SSTL spectrum amounting to Rs 392 crore per annum for the next 10 years.
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. The Shyam Group has 23.98 per cent and the rest is owned by small investors.
The deal will make RCom the largest holder of the 800/850 MHz band for wireless 4G services and help it not just compete with present players but consolidate its position ahead of commercial launch of Mukesh Ambani's Reliance Jio.