The lenders to struggling Indian mobile operator Aircel are exploring a number of options to turn the company around, according to the Economic Times citing three sources familiar with the situation.
These options include a merger with rival Tata…
The lenders to struggling Indian mobile operator Aircel are exploring a number of options to turn the company around, according to the Economic Times citing three sources familiar with the situation.
These options include a merger with rival Tata Docomo. The initiative is reportedly led by State Bank of India, Aircel’s largest lender, and would create India’s third or fourth-largest operator.
However, Tata Docomo’s owners – India’s Tata Group and Japan’s NTT Docomo – are reluctant to take on Aircel’s debt, according to the report.
Aircel is the seventh-biggest carrier in India, while Tata Docomo is sixth.
The other option to prevent the operator from defaulting is an equity infusion from Malaysian parent company Maxis.
According to an assessment from Booz Allen, cited by the paper, Aircel needs approximately US$4bn which could be raised through newly-issued shares, fresh debt, and the sale of its BWA spectrum.
In the past few months several restructuring options have been considered for the mobile carrier. In September last year, it was reported that Russian conglomerate Sistema, which controls MTS India, was close to buying a controlling stake in Aircel for approximately Rs160bn-170bn (US$2.9bn-3.1bn).
But in an emailed statement, an MTS India spokesperson said at the time there was no such transaction happening.
Earlier the Economic Times reported that regulatory uncertainties in India and an investigation against Maxis founder Ananda Krishnan and other officials prompted the decision to sell the company.
In July 2011, it had been suggested that the Indian authorities were investigating whether Dayanidhi Maran, the former telecoms minister, forced Aircel chief C Sivasankaran to sell the company under value to Maxis in 2006.
Reports said at the time that Maxis was considered close to Maran. It has been speculated that Maran forced the Aircel sale in return for the Malaysian company investing in Sun TV, owned by Kalanithi Maran, the brother of Dayanidhi Maran.
Maran and Maxis have both denied the allegations.
Aircel, Tata Docomo and Maxis were not available for comment before the press deadline.
