Chennai-based GSM operator Aircel has held talks with two Malaysian telcos, Maxis Communications and Telekom Malaysia™, with the aim of getting a strategic investor onboard, according to sources quoted by Indian newspaper The Economic Times. An Aircel source valued the proposed deal at USD700 million and said that TM was expected to begin a due diligence study on the cellco in January. Although the same source denied there were any talks with Maxis, other industry sources were quoted as saying Maxis was the front-runner in the negotiations and ‘an announcement might come as early as next week.’ Maxis refused to comment on the speculation, whereas a TM spokesperson said yesterday that the telco is ‘reviewing all available options in respect of our investment strategy in India…We wish to state that TM has always had great confidence in the potential of the Indian market and this is definitely a market TM would like to be present in. Investing in India would also complement TM’s South Asian investment in Sri Lanka, Bangladesh and Pakistan.’ The statement went on to say that the Indian government’s recent move to allow foreign investors to own up to 74% of domestic operators has made the country even more attractive to big players. Last year TM was thwarted in its attempts to enter the Indian market when a deal to buy a stake in mobile operator Idea Cellular failed to gain regulatory approval.
Aircel launched in April 1999 in the Tamil Nadu circle at the southern tip of India. It also operates in the metro region circle of Chennai and under the Digilink brand in Haryana, but remains one of the country’s smallest and most limited operators, with GSM network coverage of only 6% of the population. It provides GSM services in 362 towns in Tamil Nadu, and at the end of September it had 2.09 million subscribers. In June 2004 Aircel’s parent the Sterling Infotech Group signed an agreement to sell the operator to Hutchison Telecom. However, Hutch pulled out of the deal in early 2005 after failing to win regulatory approval for the takeover.