Malaysian Maxis to buy 65pc stake in Indian Aircel
Pallab Bhattacharya, New Delhi
Malaysia's largest mobile phone operator Maxis Communications on Friday entered into partnership with the Reddy family to buy out Indian cellphone service provider Aircel for $1.08 billion in the second largest dose of FDI in Indian telecom sector. Maxis will take a direct stake of 65 percent in Aircel by spending $702 million and the remaining through a joint venture with the Reddys, the promoters of Apollo Hospitals. The Maxis-Reddy joint venture will be an Indian company jointly owned by the Malaysian company and its Indian partner in a ratio that will give Maxis an overall equity interest in Aircel of 74 percent, the maximum foreign ownership allowed in domestic telecom sector under Indian laws. This is the second biggest infusion of foreign direct investment (FDI) in Indian telecom sector since it was thrown open to private foreign investment after Vodafone of Britain paid $1.5 billion for a ten percent stake in leading Indian mobile telephone company Bharti Tele-ventures. Of the $1.8 billion, $280 million will be injected into the company as cash for funding expansion of operations in new mobile telephone circles. This implies an enterprise valuation of $800 million for Aircel, which has a subscriber base of more than 2. 2 million.
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