Telecom tower
A tower with television antennas is pictured in Berlin October 29, 2013 [Representational Image].Reuters

Reliance Communication, post its merger with Aircel, is looking to raise about $1 billion in equity via international investors. The funds thus raised will be used for expansion plans and for buying mobile spectrum.

"We are looking at around a billion dollar of investment into the company," Punit Garg, president of Reliance Communication, said during a conference call, Reuters reported. Following the company's fundraising plans, the Reliance Communication Ltd stock was trading at Rs. 49.75 at around 1:16 p.m. on Friday, down 0.10 percent from its previous close on the Bombay Stock Exchange.

Reliance Communication (RCom) and Aircel Ltd (owned by Malaysian company Maxis Communications Berhad or MCB) on Wednesday announced the merger deal between the two telecom firms.

The wireless business of RCom and Aircel would be created into a new third entity. The move is seen as an attempt to reduce the debt of both the companies.

Talking about financing the payments Garg told the agency: "there is enough interest we've received from international financial investors in the merged company." In addition, he also said that the new company will hold talks with potential investors starting from now until the first half of next year, with the deal likely to be closed that time.

The new firm will also pay additional fees to the central government for some of the spectrums, which are held by Reliance Communication in 14 out of 22 of the Indian telecom zones.

The two companies, in a joint statement on Wednesday, said RCom and MCB will hold 50 percent stake in the merged entity each. The statement also said the merger would "reduce RCom's debt by Rs. 20,000 crore, or over 40 percent of its total debt, and Aircel's debt by Rs. 4,000 crore" at the end of the 2016-17 financial year.

The entity formed as a result of the merger is touted to have the "second-largest spectrum holding amongst all operators in India" and would compete with Bharti Airtel, Vodafone, Idea Cellular and Tata Docomo.

Quick Links