In an effort to be the second largest player in the Indian telecom industry, Reliance Communications (RCom) has signed a non-binding 90-day exclusivity period with Maxis Communications Berhad (MCB) and Sindya Securities and Investments Private Limited, the shareholders of Aircel Ltd. This deal considers potential combination of strengths of Aircel and RCom’s Indian wireless business.
The combination will exclude RCom’s optical fibre infrastructure and towers for which it is proceeding with an asset sale. Anyhow the discussions are expected to be non-binding in nature and will be subject to due diligence, definitive documentation and regulatory, shareholders’ and other third party approvals. Hence there is no certainty on the transaction.
Earlier, Reliance entered into a definitive agreement with MTS on November this year which is yet to be completed. After completion of MTS and the Aircel deal, Reliance would become the second largest telecom company based on wireless subscribers with over 190 million subscribers in India, next only to Bharti Airtel’s 235.2 million. So far Vodafone stands next to Airtel with 188 million subscribers followed by Idea Cellular’s 166.5 million subscribers.
Already Telenor is in talks to buy Videocon’s telecom wing, roughly valued at Rs 3500 crore. And Mukesh Ambani’s Reliance Jio is also expected to enter the market soon. With these developments, competition in the industry is heating up. Vodafone has also pledged to invest 9 billion rupees in India soon post the visit of Indian Prime Minister Narendra Modi to UK.
Understandably, this competition among major players is shutting the opportunities for smaller players and may force to exit the sector. This could in turn lead to dominance by two or three major players.