“Reliance Communications has informed BSE that a meeting of the board of directors of the company will be held on 2 November, inter alia, to consider a scheme of arrangement for demerger of telecom business undertaking of Sistema Shyam Teleservices into the company,” R-Com said in the notification.

In July, R-Com said it is in talks to acquire the assets of Sistema Shyam TeleServices in an all-stock deal.

R-Com is likely to allocate around 8-10% of its equity share capital in exchange for all the assets of Sistema Shyam should an agreement be reached.

R-Com will not, however, take on the debt of SSTL, which is around Rs3,800 crore.

A formal and final structure on this cash less deal will be announced on Monday.

Sistema Shyam, the Indian unit of Russia’s AFK Sistema, runs the MTS brand of wireless communications services.

A combination of Sistema Shyam and R-Com would create a telecom carrier with almost 118 million subscribers. SSTL has nearly 10 million subscribers.

India’s telecoms sector has been ripe for consolidation, but deals have been elusive, partly due to government rules on mergers, which require acquiring companies to pay the government market value for the target’s airwaves not bought in auctions.

For R-Com, the deal would give access to Sistema’s airwaves in nine circles, or zones, without a significant payout as most of its airwaves were bought in competitive auctions.

As of 31 March, R-Com had debt of Rs31,943 crore.

AFK Sistema currently holds around 56.68% stake in Sistema Shyam, 17.14% is held by the Russian government, 23.98% is held by the Shyam Group and the remaining 2.2% is held by minority shareholders.

An acquisition would help R-Com future-proof around half its telecom circles where its licences are expiring in the coming years. The company will see spectrum in the West Bengal circle expire towards 2017, while the right to use spectrum in the remaining 21 circles will come to an end towards 2022-23.

Sistema Shyam acquired spectrum in eight telecom circles in the 2013 auction. These circles are: Delhi NCR, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal. The right to use spectrum acquired in these circles expires only in 2033. R-Com acquired spectrum in Assam and the Northeast in the February auction, the right over which will expire in 2035.