Reliance Communication and Aircel merger called off

Anil Ambani led Reliance Communication has called off its merger talks with Aircel and the former has outlined an alternative plan for debt reduction by selling real estate and tower and fiber assets.

The company said that the merger agreement with Aircel was allowed to “lapse by mutual consent” as the deal had been facing regulatory delays and opposition from operational creditors. RCom also blamed the high level of competition for the termination of the merger talks. The company said that unlimited free voice offers and "irrational pricing" by all industry participants have destroyed the profitability of traditional 2G and 3G mobile business.

The company has total debt of Rs 45,000 crore which it plans to settle by selling a 51 percent stake in its mobile tower arm to Canada-based Brookfield Infrastructure. It expects to net Rs11,000 crore from the stake sale. RCom was expecting a transfer of Rs 14,000 crore of debt to the merged entity. Reliance Group chairman Anil Ambani had said the two deals will help the firm reduce debt by 60%.

RCom now plans to monetize real estate in Mumbai and Delhi as well as telecom tower and optic fiber assets to avoid lenders convert a part of their debts into equity. Now with the merger talks collapsing the deleveraging process is going to be delayed further.