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Reliance Communications pulls the plug on Aircel merger

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A merger designed to take on the competitive threat of Jio seems to have been undone by the competitive threat of Jio.

Indian operator Reliance Communications (not to be confused with Reliance Jio, although the two are owned by competing members of the Ambani family) announced over a year ago that it was going to merge with fellow operator Aircell. The move was presumed to have been catalysed by the disruptive entry into the Indian market of Jio.

12 months down the line and Reliance has decided not to follow through, complaining that “Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction.” The inference seems to be that the regulatory deck has been stacked against them, but those shady vested interests are not detailed.

In a full page of bullet-points preceding the announcement, Reliance laments “Unlimited free voice offers and irrational pricing by all industry participants have destroyed the profitability of the traditional 2G/3G mobile business.” This seems to be a direct dig at Jio, but the bullets go on to detail a new 4G-focused strategy reliant (excuse the pun) on network and spectrum sharing agreements with none other than Jio itself.

Other than the no-brainer move of focusing on 4G Reliance plans to focus on non-mobile B2B services, including overseas opportunities. To pay down some of its extensive debt there’s going to be an asset fire-sale, including towers, fibre and real estate. All these courses of action were also on the table a year ago so it seems fair to assume this is very much plan B for Reliance.

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