NEW DELHI: Reliance Communications and Aircel, which are in talks to merge, have agreed that the Anil Ambani-run telco will combine its wireless business with the smaller rival owned by Maxis and both parent companies will hold 50% each in what will emerge as India’s No. 3 carrier by users.The two companies, which started a 90-day period of exclusive merger talks on December 22, scrapped an initial plan to form a new listed company to run their combined wireless businesses.RCom and Aircel will also each transfer Rs 14,000 crore of debt to their wireless company instead of Rs 10,000 crore each. Additionally, they will retain the 2300 MHz 4G airwaves that Aircel planned to sell to Bharti Airtel , people familiar with the matter said.“The new structure that has been mutually decided is quite simple. The new entity will have to be rebranded and we expect to close the deal by September 30,” a person directly involved in the transaction said.The person said the next seven months will be spent getting regulatory and court clearances, besides finalising the management and leadership structure and reducing duplication such as offices, back-end technology services and sales and distribution.“There, of course, will be some impact at the employee level, but it’s too early to put a figure,” the person said.The wireless entity may be listed a year after the deal closes, which is around September 2017, subject to market conditions. “By that time, the operational synergies would have kicked in,” the person said.After the deal, RCom, India’s No. 4 telco currently, will focus on operations such as data centres, direct-to-home TV, optic fibre, enterprise business and its sub-sea cable operations, “besides having a 50% stake in the new entity,” the person said.RCom will remain listed and will be 10% owned by Sistema Shyam, with which it ?is in the process of merging, 55% by Anil Ambani and the rest by public shareholders.Sources said the RCom-Aircel deal would create an entity with revenue of about Rs 25,000 crore annually, earnings before interest, taxes, depreciation and amortisation of about Rs 6,000 crore and an Ebitda margin of 25%. Idea Cellular , at No. 3, posted FY15 revenue of Rs 31,555 crore on an Ebitda of Rs 9,768 crore and an Ebitda margin of 32%.The entity will have about 200 million subscribers, compared with Airtel’s 246 million, Vodafone’s 195 million and Idea’s over 173 million.Booz Allen Hamilton and AT Kearney were appointed to study the synergies of capital and operating expenditure of the wireless entity. “As per their report, opex synergies work out to Rs 2,500 crore annually and capex is estimated at Rs 1,000 crore annually,” the person said.Airtel, Booz Allen Hamilton and AT Kearney didn’t respond to emailed queries. Reliance Communications declined to comment. Aircel, 74% owned and controlled by Maxis Communications of Malaysia with Sindhya Securities and Investments owning the rest, didn’t respond to an emailed query seeking comment.All the infrastructure-sharing and spectrum trading and sharing deals that RCom has with Mukesh Ambani-run Reliance Jio Infocomm will be valid for the combined entity, said people aware of the matter.Theperson said the merged company will have almost a fifth of the entire industry spectrum holding in all bands - 2G, 3G and 4G - which will make it a strong challenger to not just Idea but to market leader Bharti Airtel and Vodafone India. Individually, the companies – both struggling with debt and falling market share – had no way of challenging their bigger rivals.The person said about Rs 1,000 crore may need to be paid to the government to convert non-auctioned airwaves in the 1800 MHz band in 14 circles into spectrum that can be shared and traded. The figure could be lower if the entity decides not to retain all the airwaves of both telcos.Sources said RCom and Aircel will each transfer Rs 14,000 crore of debt against the initial plan of transferring Rs 10,000 crore each to the combined entity.“Saudi Telecom, which is an existing shareholder in Maxis, will infuse Rs 4,000 crore of fresh equity into the new entity. This will bring the debt down to Rs 24,000 crore, which gives the new entity a debt-Ebitda of 4 times to begin with,” the person said.RCom had debt of Rs 40,479 crore at the end of December. The sale of its tower business stake to Tillman and TPG has been delayed due to funding and due diligence issues and is now expected to be sealed in the third week of March, sources added. "The negotiations on valuations are still on and the final figure could be lower than the Rs20,000 crore initially expected," one person said. The initial deadline of January 15 was pushed by a fortnight and that, too, has lapsed.Aircel currently has debt of about Rs 18,000 crore. “Maxis needs to pare around Rs 4,000 crore of debt before the deal closes,” one person said.