Monday, July 18, 2011

Reliance Industries Taking over Aircel?

Billionaire Mukesh Ambani-controlledReliance Industries is conducting an advanced due diligence exercise on telecom services provider Aircel, three people said on condition of anonymity. Reliance Industries has completed at least three rounds of due diligence on Aircel and may offer to buy a controlling stake in the company if talks between the two sides result in a deal.

Reliance Industries marked its foray into the telecom sector by acquiring Infotel Broadband for close to $1 billion last year giving it broadband wireless access licenses in 22 circles across India.

A spokesperson for Reliance Industries denied any such move. An Aircel Spokesperson said in response to queries from ET Now, "This is a baseless rumour and a mere speculative report".

People familiar with the ongoing due diligence exercise said Reliance Industries is formulating a plan to expand its basket of services to include both voice as well as data services and is keen to buy a telecom services provider which will give it access to much required back-end infrastructure as well as a large customer base which it could put to good use for its broadband roll-out.

Aircel has close to 60 million customers and 2G spectrum licenses to operate in 22 circles across India. The company also acquired 3G licenses in 13 circles and Broadband Wireless Access licenses in 8 circles in India.

Aircel had revenues of Rs 5600 crore for the calendar year 2010 and posted a net loss of Rs 260 cr for the same period. The company is likely to have total debt of close to Rs 17,000 crore this year.

Malaysia's Maxis Communications Berhad owns a 74% stake in Aircel and has been in talks with multiple global as well as local telecom players to divest its holding in the company according to people close to the group but has so far failed to arrive at a deal due to differences in valuation expectations.

Maxis is owned by a Malaysian billionaire Tatparanandam Ananda Krishnan. Aircel sold 17500 telecom towers to Manoj Tirodkar-controlled GTL Infrastructure for close to $2 billion early last year in a deal that included commitments by Aircel to use GTL's tower network for its services.

GTL derives more than 50% of its revenues from Aircel.

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