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Our Bureau

Chennai , Dec. 30

MAXIS Communications Berhad of Malaysia, a leading telecommunications company, and the Chennai-based Reddy family, the businesses founded by them include the Apollo hospitals group and Indo-National, have together bought out Aircel, the cellular operations of the C. Sivasankaran-promoted Sterling group.

According to a press release from Maxis Communications, Maxis and a joint venture to be formed by it with the Reddy family will together invest $1.08 billion (Rs 4,860 crore) of which $280 million (Rs 1,260 crore) will be injected into the company as cash.

This implies a pre-money equity valuation of $800 million (Rs 3,600 crore) for Aircel, according to the release.

The transaction would be executed in two independent stages: first, a subscription to about 6.3 crore new equity shares (26 per cent of the expanded capital) for Rs 1,260 crore and the second, a purchase of all the existing equity shares held by Aircel Televentures Ltd, 74 per cent for Rs 3,600 crore.

The second transaction would be subject to shareholders' approval and Indian regulatory approvals.

Aircel provides GSM (Global System for Mobile Communications), a digital mobile telephone system, cellular services.

Ultimately, Maxis will own 74 per cent of Aircel's equity, the maximum allowed under present Indian laws in the telecommunications sector.

On completion of the deal, which was signed in Kuala Lumpur on Friday, Maxis will hold 65 per cent equity stake in Aircel directly while the joint venture will hold the balance 35 per cent.

The joint venture will be an Indian company owned by Maxis and its Indian partner in a ratio that will give "Maxis overall equity interest in Aircel of 74 per cent."

Aircel Televentures consists of three companies - Aircel Ltd, which operates cellular services in the Tamil Nadu circle; Aircel Cellular Ltd, which provides cellular services in the contiguous Chennai circle; and Dishnet Wireless Ltd, which has started services in four circles with operations planned in six more.

Aircel and Dishnet have a combined subscriber base of about 22 lakh at the end of November 2005.

The release quoted Maxis' chairman, Tan Sri Dato Megat Zaharuddin, as saying that this would be the largest Malaysian investment ever in India and it marked another milestone in Maxis' aspiration to be a regional communications player of choice.

This strategic acquisition would give the company an entry into the fastest growing mobile market.

Ms Suneeta Reddy, representing the Reddy family, was quoted as saying that "our investment philosophy is to invest in businesses that continuously enhance the lifestyle of our customers. We believe that this telecommunications venture, in partnership with Maxis, would be a perfect fit in our endeavour to grow the telecommunications market."

Apart from being one of the fastest growing mobile markets in the world, Maxis has cited the near national presence of Aircel and its "superior financial performance" in a low average revenue per user (ARPU) environment as reasons for the acquisition. Aircel, according to Maxis, has an ARPU of about Rs 330.

Mr V. Srinivasan, Director, Aircel, said that the company's operations had grown across geographies and this platform would help Maxis realise its vision of entering the Indian market and becoming a leader in the telecommunications sector.

More Stories on : Telecommunications | Mergers & Acquisitions

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