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Maxis, partner buy India mobile operator (HL)
(Business Times (Malaysia) Via Thomson Dialog NewsEdge)MAXIS Communications Bhd and a partner will pay about RM4.1 billion to buy Indian mobile phone operator Aircel Ltd, giving it a foothold in one of the world's fastest-growing mobile markets.
The deal will be the largest investment by a Malaysian firm in India and highlights Maxis' ambition to expand overseas after its investment in Indonesia.
Malaysian mobile phone firms are looking for opportunities abroad because growth in the country is slowing down. More than two-thirds of Malaysia's 25 million people already have handphones. This compares with India's mobile penetration rate of about 6 per cent and Indonesia's 15 per cent.
"This will be a major step towards boosting Maxis' growth and sustaining profitability," chairman Tan Sri Megat Zaharuddin said in a media briefing in Kuala Lumpur yesterday.
Chief executive officer Datuk Jamaludin Ibrahim said Aircel is one of the few companies in the region that meet all its financial and strategic investment criteria.
"We see Aircel emerging as a major national player in India and contributing significantly to Maxis' subscriber, revenue and profit growth," he said.
Maxis is teaming up with the Chennai-based Reddy family to form a joint-venture company for the deal, which will be paid for in cash and debt.
Maxis will hold 26 per cent of the joint venture and the Reddy family, 74 per cent.
Maxis will then hold a 65 per cent direct stake in Aircel, while the joint venture will own the balance.
Maxis and the joint venture will invest US$1.08 billion (US$1 = RM3.78) to buy all of Aircel's shares. Initially, Maxis will inject US$280 million cash into Aircel.
Maxis will then buy 39 per cent of Aircel for US$422 million, while the joint venture will buy another 35 per cent for US$378 million.
Effectively, Maxis will have 74 per cent stake in Aircel, the maximum allowed by the Indian Government in a telco. It expects to complete the purchase in April next year.
Aircel is the number one mobile operator in the southern state of Tamil Nadu - one of the most affluent and industrially advanced states in India.
It has 2.2 million subscribers in Tamil Nadu and Chennai, and only 10 per cent of Tamil Nadu's population of 65 million own a mobile phone.
With 12 circles in operation by the end of next year, Aircel will provide Maxis with a near national platform with access to a market of more than half of India's total population. The number of subscribers in India is expected to grow between two and three times from the current 67 million.
Aircel is expected to contribute to Maxis' earnings as early as the third year of acquisition. Maxis also intends to float the Indian firm at an "appropriate time".
"Technically, it can be listed anytime, (it is a question of) just when is the best time," Jamaludin said.
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