Reliance, Russia's Sistema sign deal to establish telecommunications company

India's Reliance Group and Russia's Sistema have signed an agreement to establish a joint telecommunications company.

According to TASS news agency, Sistema's principal owner Vladimir Yevtushenkov said that his company has signed an agreement with Anil Ambani's Reliance Group to establish a joint venture.

On November 2, Sistema signed binding documents on the merger of its Indian telecom business Sistema Shyam TeleServices Ltd (SSTL) and Reliance Communications, which is one of the largest telecom operators in India.

The two companies signed the agreement after Prime Minister Narendra Modi attended the CEO Forum in Moscow, during his two-day bilateral visit to the country for the 16th Annual Summit.

The transaction implies that the telecom business is spun out from SSTL and merged with the business of Reliance Communications.SSTL share in the capital of the combined company will be 10%. 

The market capitalisation of Reliance is about $2.5 billion (approximately Rs 16,560 crore), so this share is estimated at $250 million (approximately Rs 1,656 crore).The transaction is expected to be closed in the second quarter of 2016.