Reliance Communications, which on Wednesday announced the merger of its wireless business with Aircel, is looking to raise $1 billion (approximately Rs 6,686.5 crore) in equity to expand the venture and make possible payments to the government for mobile spectrum use, Reuters reported on Thursday. Executives from the Anil Ambani-owned company said the merged entity will begin operations with a debt of $4.2 billion (around Rs 28,083 crore). Both R-Comm and Maxis Communications Berhad, which owns majority stake in Aircel, will hold a 50% stake in the venture.
Reliance Communications President Punit Garg said "international financial investors" had expressed interest in funding the new company. He added that the venture could raise another $1 billion (approximately Rs 6,685.5 crore) in bank debt to fund its expansion plans, if needed. The carrier might have to pay additional fees for certain spectrum held by Reliance Communications in 14 of India's 22 telecom zones.
Reliance expects to cut its net debt of Rs 42,000 crore by around Rs 20,000 crore after the merger goes through. Company officials said Aircel, which has a Rs 18,000-crore debt, expects to cut it by Rs 4,000 crore by selling airwaves and mobile towers. R-Comm will continue to operate its undersea cable business and data centres after the merger.
The R-Comm-Aircel merger will create a subscriber base of around 190 million. The new entity will also hold 19.3% of total spectrum, which would be the highest in the sector, according to PTI. The move was announced weeks after Mukesh Ambani’s Reliance Industries Limited launched Reliance Jio, promising data services at as low as Rs 50 per GB, free voice calls to all Jio customers and nationwide free roaming.