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Indian Mobile Networks in Merger Talks

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India's Reliance Communications (RCom) has confirmed that it is in merger talks with a rival mobile network.

In a statement, RCom said that it has "entered into exclusive discussions on a potential merger between the Indian telecom business of Sistema Shyam TeleServices Limited and RCom through a stock swap,"

The deal could see to medium-sized operators merge in a move that will help offset some of the heavy debt they have built up through cost savings and rationalisation.

Reports suggest that SSTL, which operates under the MTS brandname could end up with between 7-10 percent of the merged company.

A key gain for RCom would be cut-price access to SSTL's radio spectrum assets.

SSTL operates in nine telecom circles-Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh (West), Kerala and West Bengal. It also operates in Rajasthan, although that license is up for renewal in 2018.

If a merger is consummated, the merged company would hold 800Mhz spectrum across 15 circles, which is considered to be ideal for launching LTE services.

Most of that spectrum would not need to be renewed until 2022, giving the company many years to prepare for that heavy bill.

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Tags: reliance communications  mts  India