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MTS India Merges With RCom

Anil Ambani-led Reliance Communications today announced the takeover of Sistema Shyam Teleservices Limited (SSTL), the Indian arm of Russia’s Sistema, which operates under the brand name of MTS India.

With 109 million subscribers, Reliance Communications Ltd. (RCom) is the fourth-largest operator in India, but its subscriber base will grow to about 118 million (according to August 2015 data from the Telecom Regulatory Authority of India (TRAI) ) following the tie-up with Sistema Shyam TeleServices Ltd. (SSTL). Market leader Bharti Airtel Ltd. (Mumbai: BHARTIARTL) currently serves 232 million customers, while Vodafone India has 186.5 million and Idea Cellular Ltd.about 164 million.

India remains an intensely competitive telecom market where average revenue per user is low, and experts have long argued that it will ultimately not be able to support more than four or five players.

In some circles, however, there are as many as ten operators, which has made consolidation look increasingly probable. The merger between RCom and SSTL is likely to be the first of a number of such deals that will take place over the next few months, with smaller players like Aircel Ltd. , Videocon Telecommunications Ltd. , Telenor ASA (Nasdaq: TELN) and Tata Teleservices Ltd. also believed to be exploring merger opportunities.

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