Reliance Infocomm to merge with RComVL

13 March 2006

The group has decided to merge Reliance Infocomm, the CDMA mobile telecom operator, with the listed holding company Reliance Communication Ventures Limited (RComVL). Other operating telecom companies of the group like Flag Telecom, Reliance Telecom (GSM mobile telecom operator) and Reliance Communication Infrastructure would become 100-per cent subsidiaries of RComVL.

Promoters and other shareholders of these operating companies would be issued equity shares and the transactions would not result in any cash outgo for RComVL. The company's board yesterday approved the proposals and the issue of equity shares.

The restructuring is expected to result increase the share capital of RComVL by nearly two-thirds. Promoters' holding in the company would significantly increase to around 63 per cent from around 40 per cent at present as the promoter's holding in the operating companies are high.

The shareholding structures of some of these operating companies were highly complex. Reliance Infocomm was said to have more than 200 holding companies controlled by the Ambani family. The holding structures of other companies were also not very clear.

This exercise would consolidate the entire group holding in the telecom business under RComVL and bring in much needed transparency.

The restructuring is subject to shareholder approval and subsequently from the High Court. The group is planning to complete the process within the next four months. Trading in RcomVL shares would not be affected in any way during this period.