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Our Bureau

Chennai , Jan. 4

MAXIS Communications Berhad of Malaysia, which has signed an agreement to acquire the mobile operations of the Sterling Infotech group, plans to use this as a base to build a national business here in the medium to long term.

In an e-mail response, Maxis' spokesperson said with Aircel and the licences it has or will receive, Maxis would have access to 58 per cent of the population in India. "Maxis will seek, either through organic growth or by participating in consolidation, to extend this reach to as many people as possible," the spokesperson said when asked about Maxis' strategy for India.

Aircel has cellular operations in Chennai and Tamil Nadu circles, and recently started operations in four more with approvals for six other circles pending.

Last week, Maxis signed an agreement to acquire the three cellular businesses of the C. Sivasankaran-promoted Sterling Infotech group — Aircel Ltd, Aircel Cellular Ltd and Dishnet Wireless Ltd (all of which come under Aircel Televentures Ltd) — for a total investment of Rs 4,860 crore. Maxis will hold a 74 per cent equity interest in Aircel and an Indian partner — the promoters of Apollo Hospitals group and Indo National Ltd — the balance.

India, the spokesperson said, was also expected to be an important resource base for Maxis in terms of manpower, skills and suppliers. "In due course, we expect to seek to use our Indian operations as base for those operations where off-shoring makes sense," the spokesperson said.

Maxis also intended to seek synergies between its Malaysian, Indonesian and Indian operations given the potential scale of the combined businesses. Apart from the large mobile opportunity, Maxis sees tremendous opportunities in newer technologies such as 3G and wireless broadband. "With operations in three countries with low broadband penetration, we expect to have enough capacity to build businesses in these areas in the medium term," the spokesperson said.

Two nominees on board: Maxis has appointed Mr Jamaluddin Ibrahim, its Chief Executive Officer, and Mr Chan Chee Beng to the board of Aircel. Apart from nominating two members to Aircel's board, Maxis has the option to appoint a chief financial officer for Aircel.

Those connected with the deal say that it will be three months before Maxis obtains all clearances — from its shareholders and regulatory approvals in India — for the deal to be completed.

The share purchase agreement with Sterling Infotech group is expected to be completed within a week, by which time Maxis also hopes to finalise the structure of the joint venture company with the Reddy family, promoters of Apollo Hospitals and Indo National. Maxis will acquire a 65 per cent stake directly in Aircel and will acquire another 9 per cent through its investment in the joint venture.

Non-compete clause: The agreement with the Sterling Infotech group also includes a non-compete clause under which the group, its directors, officers and employees cannot participate in any capacity in any specified mobile technology services in India, either as an investor or as consultant. "Aircel shall be the sole and exclusive vehicle of Maxis for the same services in India, either as an investor or consultant or otherwise, until the earlier of the occurrence of an initial public offering of Aircel or the Contingent Payment," says a clause in the agreement. The agreement also says that a contingent payment may be made to Aircel Televentures Ltd at a future point in time; the value of this payment is based on a formula that is dependent on the performance of the Aircel group. The date of payment is also subject to pre-defined events.

More Stories on : Telecommunications | Mergers & Acquisitions

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