Malaysia’s Maxis, Apollo buy Aircel for $1.08 bn

MUMBAI: Marking the biggest Malaysian investment in the country till date, mobile operator Maxis Communications Berhad, along with Chennai-based Apollo Group, will buyout Aircel Ltd, the Tamil Nadu-based mobile operator, for  $1.08 billion. Of this, $280 million would be injected into the company as cash. The valuation of Aircel works out to $800 million.

On an ARPU (average revenue per user) of $7.30 per month, Aircel’s revenues for the financial year ended March 31 was $122 million. Its operating profit was $57 million and net profit for the period was $25 million.

On completion of the proposed acquisition, Maxis will hold 65% stake in Aircel directly, while the joint venture company would hold the rest. Under the terms of the deal, the joint venture company would be an Indian company, jointly owned by Maxis and the Reddy family in a ratio that will give Maxis an overall equity interest in Aircel of 74%, the maximum foreign ownership permitted in Indian telecom companies.

“We are delighted to make this strategic entry into the Indian telecom market,” Maxis chairman Tan Sri Dato’ Megat Zaharuddin said. “This acquisition, which is also the largest Malaysian investment ever in India, marks another milestone in our aspiration to be a regional communications player of choice,” he said.

The transaction will be executed in two independent stages. In the first stage, a subscription for new equity shares (26% of the expanded capital) will be made and the second, the purchasing the existing equity shares held by Aircel Televentures Ltd.

The second transaction will be subject to shareholders, Malaysian government, and Indian regulatory approvals.

Aircel is the leading mobile operator in Tamil Nadu. The company’s mobile subscriber base as of October 2005 stood at 2.2 million in the state.

In September, Aircel launched its services in five circles and by the end of 2006, it plans to roll out its services in five new regional markets, viz Bihar, Himachal Pradesh, Madhya Pradesh, Uttar Pradesh (E), and Uttar Pradesh (W).

With a total of 12 circles planned to be in operation by the end of 2006, Aircel will provide Maxis with a near national platform with access to a market of about 628 million people or 58% of India’s total population, Maxis said.

Commenting on the acquisition, Aircel’s director, V Srinivasan, said, “Aircel has taken rapid strides from being a single circle operator to spreading its wings across various geographies in north and east India.”