Shares of Reliance Communication rose 3 percent intraday on Tuesday hoping for a possible merger. The telecom company has said it is entered into exclusive merger talks with Sistema Shyam Teleservices (SSTL) through share swap.
"The discussions are indicative and non-binding in nature, and remain subject to due diligence, definitive documentation and approvals, as may be necessary. There is no certainty that any transaction will result," Reliance Comm said in a press statement.
Sistema Group, Government of Russia and Shyam Group are likely to hold about 10-12 percent stake in the merged entity. If the merger does go through, the combined entity will have 6.5 percent of the total telecom market share.
HSBC says the transaction will help in reducing risk around spectrum renewal, while Bank of America-Merill Lynch says theoretically merged entity could derive scale benefits
SSTL offers telecom services under the MTS brand using CDMA technology in nine of India's 22 service areas to more than nine million subscribers.
At 10:54 hrs Reliance Communications was at Rs 59.60, up Rs 0.75, or 1.27 percent on the BSE.
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