With debt piling up to Rs 20,000 crore, mobile service provider Aircel may soon need to go in for corporate debt restructuring so as to ease the pressure building on its finances.

According to banking sector sources, Aircel could soon sound out the lenders in this regard. When contacted, Aircel said that it was not aware of such a development, but the sources said the company’s finances were in a mess that required a debt recast. Maxis Communications of Malaysia owns 74 per cent stake in Aircel, with the balance held by the Reddys of the Apollo Hospitals Group.

In 2009, Aircel Cellular had raised Rs 14,300 crore in debt for expanding operations. State Bank of India had advanced around Rs 10,000 crore, while the rest was by Standard Chartered in dollars.

In 2010, the operator took another loan of about Rs 2,000 crore and restructured its short-term loans worth Rs 11,000 crore into a long-term debt of about Rs 13,000 crore. That year, Aircel paid about Rs 6,500 crore for 3G spectrum licences in 13 circles and about Rs 3,800 crore for broadband wireless access spectrum licences in eight circles.

All this has left the company atop a debt hill. There had been reports that the company was exploring equity sale to a number of players, including Russia’s Sistema. However, in November last, the Government announced a policy wherein a company acquiring an existing operator will have to pay the Government the market price of the spectrum.

While both Sistema and Aircel had denied talks were going on, the policy meant that Sistema would have had to pay nearly Rs 14,000 crore to the Government for acquiring 4.4 Mhz of spectrum held by Aircel.

The Central Bureau of Investigations is also looking into allegations from the company’s former owner C. Sivasankaran that former Telecom Minister Dayanidhi Maran forced him to sell Aircel to Maxis in 2006.

Thomas.thomas@thehindu.co.in

(This article was published on February 27, 2013)
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