Reliance Communications Ltd’s plan to merge with Aircel Ltd collapsed in a blow to the Indian mobile phone carriers’ plans to pare debt and gain scale to take on bigger rivals.
“Legal uncertainties” and “interventions by vested interests” caused delays in regulatory approvals, Reliance Communications said in an exchange filing on Sunday.
Consequently, the merger has “lapsed with mutual consent,” it said.
Billionaire Anil Ambani’s Reliance and T. Ananda Krishnan’s Aircel, a unit of Malaysia-based Maxis Communications Bhd, were due to complete the transaction this year.
India’s mobile carriers have been locked in a price war that had worsened with the entry of Ambani’s older brother, India’s richest person, into the market a year earlier.
The deal would have created India’s fourth-largest carrier and given the companies more room to pay down combined debt that soared to about 600 billion rupees (US$9.2 billion) as of the end of last year.
Aircel was one of several possible transactions that Ambani was pushing as a way to reduce Reliance’s debt.
Reliance Communications will consider an alternate plan to cut debt, which includes sharing and trading of its airwaves valued at about 190 billion rupees, the company said in the statement on Sunday.
It will also consider plans to monetize its real-estate, tower and fiber businesses.
Banks that lent to Ambani’s companies have met with executives from the group to push for a reduction in debt by selling assets, people familiar with the matter, who did not want to be named because the talks were private, have said.
RCom, as the wireless unit is known, got a seven-month reprieve from lenders in June to raise money from deals.
Under the terms of the proposed merger with Aircel, Reliance would have transfered more than 40 percent of its debt, or 200 billion rupees, to a new joint venture.
Aircel, which is controlled by a unit of Maxis Bhd, would have offloaded 40 billion rupees of debt to the venture.
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