MUMBAI: Maxis Communications Berhad announced at a press conference in Kuala Lumpur, that it is on track to complete the USD1.08 billion acquisition of Indian mobile operator Aircel Limited, after receiving shareholders’ approval.
Upon the completion of the proposed acquisition, Maxis will hold a controlling 74 per cent equity interest in Aircel, as a result of its 65 per cent direct stake and 9 per cent indirect stake via its participation in Deccan Digital Networks Private Limited. Deccan Digital is the joint venture company Maxis has set up with the Chennai based Reddy family. The JVC will own a 35 per cent direct stake in Aircel.
Maxis currently holds 26 per cent of the issued and paid up share capital of Aircel, in a transaction completed on 6 January 2006. The completion of the transaction is still subject to Malaysian and Indian regulatory approvals, and is expected to complete soon after receiving the requisite approvals from India’s Foreign Investment Promotion Board.
In total, Maxis will directly invest US$702 million for its equity interest while the JVC will invest the remaining US$378 million, states an official release.
“We are pleased that our shareholders have given us the mandate to make this strategic entry into the high growth Indian market. In this fast growing, low mobile penetration telecommunications market, our aim is to transform Aircel from being perceived just as a regional operator to a national player,” said Maxis chairman, Tan Sri Dato’ Megat Zaharuddin.
He added, “This major step will immediately boost Maxis’ growth as Aircel is already serving 2.4 million customers in its current markets. In the longer term, our investments in India and Indonesia will ensure Maxis’ strong top line and bottom line growth, thereby, creating significant value for all our stakeholders”.
Aircel is one of the leading mobile players in Tamil Nadu and Chennai. It is focused on expanding its services to 10 new circles by the end of 2006. Services were launched in five of these circles, West Bengal, Orissa, Assam, North East, and Jammu & Kashmir, in late 2005. The company expects to roll out mobile services in five other markets, Bihar, Himachal Pradesh, Madhya Pradesh, Uttar Pradesh (E), and Uttar Pradesh (W) by the end of this year, the release adds.
Aircel has also received an additional 1.8 Mhz spectrum in Chennai to support its growth in the south, as well as frequency for Bihar where rollout is expected to commence soon. In addition, the company has applied for licences in eight new circles, Haryana, Kolkata, Kerala, Punjab, Mumbai, Karnataka, Rajasthan and Maharashtra. This will allow Aircel to reach an additional 28 per cent of the population, or cumulatively 86 per cent of India’s total population.
“We are committed to making the significant investments necessary to become a pan Indian player. Investments of US$500 million are required support the rollout in the new circles where we have either launched services or are in preparation for launch.
“Given the rapid growth in the circles in the past few months, more investments are planned to support the existing and additional circles that we are targeting,” said Maxis CEO Dato’ Jamaludin Ibrahim.
The intention is that the capital for these investments be raised at the Aircel level.
Aircel’s director, V. Srinivasan added, “We are excited at the potential of the company now that Maxis is set to become our major shareholder. With Maxis’ financial strength and market experience, Aircel is now well positioned to participate in the national growth of the telecommunications market”.
The Indian mobile market, with its low mobile penetration rate, is amongst the fastest growing in the world. It recorded a 108% annual growth to reach 75 million subscribers by year-end 2005, while its January growth of 4.68 million users puts it on par with China for the first time. By 2008, the number of Indian subscribers is expected to grow between two and three times from 2005.
