MTNL shelves Suntel acquisition

Indian state-owned telco Mahanagar Telephone Nigam Limited (MTNL) has suspended indefinitely its planned acquisition of Sri Lankan wireless in the local loop (WiLL) operator Suntel, reports Indian news source the Economic Times. MTNL had emerged as the preferred bidder to buy Suntel for up to USD180 million, but an anonymous senior MTNL executive was quoted by the newspaper as saying ‘the Suntel plan has been put on the back burner. I am not sure if the company will revive the proposal to acquire Suntel.’ The executive hinted that MTNL may have lost interest in Suntel because of the latter’s apparent lack of eagerness to close the deal. ‘We had appointed a consultant to help us finalise several crucial issues before going ahead with the deal. But, there has been no progress due to lack of interest from Suntel,’ the unidentified spokesperson said. Another senior MTNL executive said that deal could be off as the consultant appointed by the telco had failed to find a joint venture partner that would hold a 50% stake in Suntel. Under the proposed deal structure, MTNL wanted to limit its stake in Suntel to 50%. In September 2007 MTNL submitted a formal bid for Suntel, but in August 2008 the plan was reported to be on hold while the Indian company continued to look for a suitable investment partner. Suntel has an estimated 400,000 fixed line customers, and its largest shareholder is Stockholm-based Overseas Telecom, an associated company of TeliaSonera, with a 55% stake. MTNL is currently increasing domestic investment as it seeks to roll out 3G networks in Mumbai and Delhi, whilst in recent times it failed in a bid to acquire Telekom Kenya, in addition to losing mobile licence auctions in countries including Saudi Arabia, Qatar and Bhutan.