Russian conglomerate Sistema is reportedly close to buying a controlling stake in Indian mobile operator Aircel for approximately Rs160bn-170bn (US$2.9bn-3.1bn), according to the Economic Times citing two sources close to the matter.
The deal would mark…
Russian conglomerate Sistema is reportedly close to buying a controlling stake in Indian mobile operator Aircel for approximately Rs160bn-170bn (US$2.9bn-3.1bn), according to the Economic Times citing two sources close to the matter.
The deal would mark the largest transaction in the Indian telecoms sector since Vodafone bought a 67% stake in Hutchison Essar (now known as Vodafone India) for US$11.2bn in 2007.
The Economic Times said that Sistema would buy into Aircel’s parent company, Malaysia-based Maxis Communications, before transferring the Indian company to its operations.
This would allow the Russian company, which already controls local carrier MTS India, to bypass M&A guidelines in the country whereby an operator is not allowed to control more than 10% of another operator in the same service area.
But in an emailed statement, an MTS India spokesperson said there is no such transaction happening. The spokesperson added: “From the perspective of Sistema Shyam TeleServices [MTS India], the immediate priority is to seek clarity on spectrum related regulations from the government […]”.
MTS India is among the eight operators that will have their licences cancelled after the Supreme Court ruled earlier this year that they had been illegally granted in 2008. On several occasions, the Russian company has threatened to pull out of the country if no amicable settlement can be reached. The new 2G auction is expected to start in mid-November.
Ravishankar Raghavan, principal at Indian law firm Majmudar & Co, commented that buying an existing operator with a solid customer base (65 million) would enable Sistema to end uncertainties about its future in the country.
But he added in an interview with TelecomFinance that the company may first try to seek clarity on its spectrum-related issues before embarking on such huge investment.
Aircel is the seventh-largest operator in the country while MTS India, with 16.8 million subscribers, is the ninth-biggest.
An exit from the Indian telecoms market would also bring some relief to Maxis. An earlier Economic Times report noted that regulatory uncertainties in India and an alleged probe against Maxis founder Ananda Krishnan and other officials, regarding a telecom scandal, prompted the decision to sale the company.
In July last year, 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 to Maxis at a very cheap price 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.
The sale of Aircel, which is 74%-owned by Maxis, would come as Krishnan is reportedly looking to divest several other assets, including Malaysian satellite operator Measat and DTH platform Astro All Asia Networks.
Aircel and Maxis were not immediately available for comments before the press deadline.
