Update 2 (14 Sep): It looks like the Aircel-Sistema deal is reaching its final stages. The Economic Times is reporting that Sistema is close to acquiring a controlling stake in Aircel from Maxis Communications for around $3 billion, citing two sources familiar with the development. However, it’s worth noting that Sistema has told the publication that these talks are motivated, while an Aircel spokesperson has claimed having no knowledge of any such deal.
Citing a source familiar with the talks, the report states that the deal was being formulated in a manner which could allow Sistema’s Indian subsidiary SSTL (Sistema Shyam Teleservices) to bid for CDMA spectrum in the future, since SSTL which operates in India as MTS India, had lost all its licenses when the Indian Supreme Court cancelled 122 licenses in February 2012.
Interestingly, ET’s sister publication The Times Of India, also reports a similar development, although it pegs the deal valuation at $6 billion. Citing its own sources, the report states that the Reddy family which currently holds 26% stake in Aircel through Sindya Securities and Investments Pvt Ltd, is also planning to exit Aircel, after the family was pulled into CBI Investigations related to Aircel. It also added that a prominent Indian industrialist was currently moderating the deal between Sistema and Maxis, although there is no information on who the Industrialist was.
Update (12 July): In an interview with the television channel CNBC TV18, Maxis Communications group CEO Sandip Das has dismissed any such plans and stated that Maxis Communications is here to stay in the country, adding that they are “extremely serious player and are bullish about India”.
Previously (12 July): Maxis Communications, the Malaysian telecom operator and majority stake holder in the Indian telecom operator Aircel, is planning to exit India and is reportedly in talks to sell Aircel, according to a report in The Economic Times.The report states that this development was prompted by uncertainty in telecom laws and the ongoing investigation against its founder T Ananda Krishnan and other top officials, for alleged involvement in a telecom scandal in the country.
Quoting a senior executive with direct knowledge in the matter, the report states that Maxis is currently in talks with the Russian conglomerate Sistema which operates in India as MTS, and has held a few discussion rounds with bankers representing Sistema, although a Sistema India spokesperson denied any such talks to the publication.
Founded in 1999, Aircel launched its operations in Tamil Nadu and had claimed to become the leading mobile operator in the state within 18 months of its launch. It launched its service in Chennai in 2003 and started expanding its operations outside Tamil Nadu in 2005.
– In 2005, Maxis Communications partnered with the Apollo group promoters Reddy family, to acquire the telecom operator for $1.08 billion. As per the deal, Maxis invested $702 million to get a direct 65% stake while it held the remaining stake indirectly from a joint venture company in which the Apollo group’s Reddy family held 74% stake and Maxis Group held 26% stake. Overall, Maxis communication held 74% stake and its Indian JV partner held 26%. In July 2011, Apollo Hospitals Group announced that it no longer has a stake in Aircel and Sindya Securities and Investments Pvt Ltd, promoted by Suneeta Reddy and P. Dwarakanath Reddy now holds 26% stake in the telecom operator.
– Aircel won spectrum in 13 circles for Rs. 6499.46 crore during the 3G spectrum auctions held in May 2010, with the costliest circle being Karnataka at Rs. 1579.91 crore, followed by Tamil Nadu at Rs. 1464.94 crore and Andhra Pradesh at Rs. 1373.14 crore. A month later, the operator also won BWA spectrum in eight circles for Rs. 3438.01 crore during the Broadband Wireless Access spectrum auction, with the costliest acquisition being Tamil Nadu, at Rs. 2069.45 Cr.
– Aircel launched its 3G services in Chennai in February 2011, prior to which it had launched 3G Zones in Chennai to demo 3G based services to users. The company currently offers 3G services in all the 13 circles including Andhra Pradesh, Assam, Bihar, Jammu & Kashmir, Karnataka, Kerala, Kolkata, Madhya Pradesh and Chhattisgarh, North East, Orissa, Punjab, Tamil Nadu, Uttar Pradesh (East) and Uttarakhand and West Bengal. Late last year, it had partnered with Tata Docomo to provide 3G services in each other’s circles but scrapped the agreement in December 2011, following the Department of Telecom’s announcement that these arrangements were illegal.
– In June 2011, Central Bureau of Investigation (CBI) conducted an investigation on former Telecom Minister, Dayanidhi Maran on allegations of manipulations during spectrum allocation in 2006, to favour telecom operator Aircel and had filed several charges against him and his brother Kalanidhi Maran, including the charges of bribery, misuse of power and criminal conspiracy. CBI had alleged that Dayanidhi Maran had received Rs 550 crore from Maxis communications to force the Aircel sale, as indicated by a Hindustan Times report.
Aircel currently operates in all 23 telecom circles and claims to be the leading telecom operator in Tamil Nadu, Chennai, Assam and in the North Eastern regions. As of May 2012, Aircel was the seventh largest telecom operator in the country with 6.93% marketshare and 64 million subscribers, of which 37.19 million are active subscribers. There is currently no information on the company’ 4G rollout plans but reports suggest that the company plans to launch 4G service by the end of 2012. Apart from this, Aircel had also started rolling out WiFi Hotspots across the country and had claimed to have 50,000 WiFi Zones across India.