It was curtains for one of India’s iconic brands RCom after the cellular operator announced on Wednesday that the market regulator had approved its merger with Aircel. This will be the end of RCom as a consumer brand as the new entity may operate under the Aircel brand.
This in effect means that there will be only one Reliance brand in the market offering mobile services — Reliance Jio. Rjio is promoted by billionaire Mukesh Ambani, while younger brother Anil Ambani owns RCom.
Before the company founded by Dhirubhai Ambani was split among the brothers, Reliance Infocomm (later renamed as RCom) had shaken up the telecom sector in the country by reducing call costs drastically in the earlier part of this century.
Though entering the mobile service space is considered to be the brainchild of Mukesh Ambani, it was Anil Ambani who walked away with the telecom company after the split.
Non-compete clause
Mukesh Ambani had to wait close to a decade to re-enter the telecom sector as a non-compete clause with Anil kept him away.
On Wednesday, RCom said the proposed merger with Aircel also received BSE and NSE approvals.
The new entity is slated to create the country’s third-largest telecom operator.
RCom announced its plans to merge its wireless business with Aircel and create a new entity. First, RCom will demerge its existing cellular business that has about 88 million subscribers, and then merge it with Aircel.
However, other businesses such as tower assets and fixed-line enterprise units will continue to remain with RCom.
RCom and Aircel’s Malaysia-based promoters Maxis Communications Berhad will hold 50 per cent each in the venture, with equal representation on the board. RCom had earlier merged with Sistema JSFC’s Indian operations — MTS — under which the Russian company holds a 10 per cent stake in RCom.
The merged entity will, however, carry a debt of nearly ₹28,000 crore — RCom and Aircel will each contribute half that amount into the debt pool.
RCom shares rose 1.52 per cent to ₹36.80, on the BSE on Wednesday.
source http://m.thehindubusinessline.com/info-tech/jio-reliance-sun-sets-on-rcom-as-a-consumer-brand/article9585840.ece