Reliance Communications today said its shareholders have approved the proposal for merger of Sistema Shyam Teleservices with the company.
"The Court Convened meeting of the members of the Company held on March 8, 2016 to consider and approve Scheme of Arrangement of Sistema Shyam TeleServices Limited with the Company (Scheme), the Members of the Company have duly approved the Scheme, voting by way of poll at the meeting and through e-voting," RCom said in a BSE filing.
The RCom-SSTL merger deal has been cleared by Competition Commission of India, Rajasthan High Court, Bombay High Court and SEBI.
On March 18, shareholders of SSTL are scheduled meet to decide on the deal. After clearance from SSTL shareholder, RCom will approach the Department of Telecom for final paperwork.
The deal between RCom and SSTL is valued at around USD 690 million (Rs 4,500 crore) and is expected to close in the second quarter of 2016.
SSTL will hold about 10 per cent stake in RCom and pay off its existing debt before closing the deal.
While the two companies did not disclose financial details of the deal, as per industry source SSTLs equity stake has been valued at USD 290-300 million at current prices.
RComs 10 per cent stake comes at around USD 300 million.
While SSTL will pay off its existing USD 500 million debt, RCom will assume the liability to pay the government installments for SSTLs spectrum, amounting to Rs 392 crore per annum for the next 10 years.
Sistema may get up to USD 300 million in cash from RCom if the government were not to agree on the fee payment.
Russian tycoon Vladimir Evtushenkov-controlled AFK Sistema currently holds 56.68 per cent stake in SSTL while Russian government owns 17.14 per cent interest. Shyam Group has 23.98 per cent stake and the rest is owned by small investors.
The deal will make RCom the largest holder of the 800/850 megahertz band for wireless fourth-generation services and help it not just compete with present players but also consolidate its position ahead of Mukesh Ambanis foray into sector with 4G services under Reliance Jio brand.
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