Indian billionaire Anil Ambani’s Reliance Communications has called off a merger deal with smaller rival Aircel over “legal and regulatory uncertainties”, throwing its debt repayment plans into doubt.
The cash-strapped telecom firm, better known as RCom, had announced last September it was combining its wireless mobile services with Aircel’s Malaysia-based parent Maxis Communications Bhd to cut debt.
The merger would have created the country’s fourth-largest carrier after three dominant players Airtel, Vodafone and Idea.
On Sunday, RCom said both companies agreed to cancel the deal, which was slated to be completed this year.
“Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction,” Prakash Shenoy, RCom secretary, said in a statement.
RCom had a net debt of over 443 billion rupees ($6.7 billion) at the end of March this year.
Last year, it had said the deal—which it called the “largest-ever
consolidation in the Indian telecom sector”—would help reduce RCom’s debt by $3 billion and Aircel’s by $600 million.
The collapsed deal raises fresh doubts over RCom’s survival prospects, especially at a time of intensified competition and dramatic reshaping of the world’s second-biggest telecoms market.
Mobile carriers in India have been locked in a heated price battle that escalated further last year with the entry of Anil’s elder brother Mukesh Ambani—the country’s richest person—into the market.
Mukesh launched Reliance Jio 4G network with an audacious free service for the rest of 2016, followed by vastly cheaper data plans and free voice calls for life.
British mobile phone giant Vodafone is set to merge its Indian unit with Idea to help fend off Jio, which is backed by Reliance Industries—India’s immensely wealthy energy-to-chemicals conglomerate headed by Mukesh, reports AFP.