AirCom, the New Name for RCom-AirCel Merged Entity
Reliance Communications chairman Anil Ambani gave a new name AirCom to the merged entity of RCom-Aircel. Both the RCom and Maxis will hold 50% stake in the new wireless company AirCom. The proposed AirCom will have the second largest spectrum holding in India across the 850, 900, 1800, and 2100 MHz bands.
RCom’s Debt Resolution Plan:
In a bid to reassure investors, Mr. Anil Ambani held a media conference quoting that the group will repay ₹25,000 crore (after Aircel and Brookfield deals) before September 30. The company has been facing heavy debt load and thus been downgraded by the credit rating companies.
Incidentally, the tower deal with Brookfield will reduce debt to ₹20,000 crore from ₹45,000 crore. Thus, Anil Ambani-led telecom company RCom will hold 49% in Brookfield transaction.
Furthermore, Mr. Anil Ambani also hinted that the company might sell the overseas business of undersea cables run under the Global Cloud Exchange banner. To reduce debt, it may even sell its 49% share in the tower arm.
Telecom Market Not Viable:
While explaining the financial condition of Reliance Communications, Mr. Anil Ambani said that hyper-competitiveness, heavy tax burden in the telecom sector and bank loans are the prime reasons for its bad debt. The 43% tax payment to the government is a troublesome issue and the Indian Government should consider a 3-year moratorium on the increased GST.
Till date, the telecom sector is known to provide second highest employment opportunities after IT but the present scenario in the telecom sector will shed up to 40,000 jobs in this current financial year.
With the entry of Reliance Jio, mobile data prices have crashed from ₹250 to ₹50 per GB. Citing his cordial relationship with Mr. Mukesh Ambani, the younger brother told that RCom and Jio are separate entities and will have strategic cooperation in terms of spectrum, towers and any other areas that can bring synergies to both the companies.
Enjoy Benefits of Scale:
The merging of Aircel and RCom will have a good spectrum capability to provide 2G, 3G, and 4G services across PAN India. Moreover, the new entity will use data network of Reliance Jio. Though one cannot expect fireworks, the merger will fill the service deficiencies.
Let AirCom expand its footprint in rural areas too and emerge as the third largest telecom company.