NEW DELHI: Malaysia's largest mobile operator Maxis Communications on Friday joined hands with the Chennai-based Reddy family (Apollo Group) to acquire the entire holding of Aircel Limited. Speaking to The Hindu, Maxis Managing Director Jamaludin Ibrahim said there would be no immediate change in the management structure. "They are doing a good job. As we grow further, we will organise the team. At this point we are happy,'' he said.

Aircel runs mobile services in Tamil Nadu and has made forays in five more telecom circles. The company is also planning to extend its footprint in Uttar Pradesh and Madhya Pradesh.

"For us the business strategy is clear. We will invest in anything that enhances consumer lifestyle, especially in India where the per capita income is growing. In particular, there is going to be growth in healthcare and telecom sectors,'' said Sunita Reddy whose family will hold 35 per cent of the stake in a joint venture company that will take over Aircel while Maxis will hold the balance. The Reddy family has stakes in a power plant in Tamil Nadu and in the hospitality business.

Maxis and the Reddys' will jointly invest $1.08 billion (about Rs. 5,000 crore) to purchase the entire stake. Of this, $280 million will be directly injected in the company to finance expansion operations in the rest of the country. This implies a pre-money equity valuation of $800 million for Aircel.

The Maxis-Reddy joint venture will be an Indian company jointly owned by Maxis and its Indian partner in a ratio that will give Maxis an overall equity interest in Aircel of 74 per cent, the maximum foreign ownership permitted in Indian telecommunications companies.

The transaction will be executed in two stages — a subscription for new equity shares (26 per cent of the expanded capital) followed by the purchase of all the existing equity shares held by Aircel Televentures Limited.

"Apart from the large mobile opportunity, we see opportunities in technologies such as 3G and wireless broadband. With operations in three countries with low broadband penetration, we expect to have enough capacity to build businesses in these areas in the medium term. India will be an important source of content for both mobile and broadband services,'' said Mr. Jamaludin.

Explaining the reason for extending operations in areas not considered high revenue yielding, Aircel Director V. Srinivasan pointed out that with growth saturating in the metros and A category circles, the potential for growth was much more in B and C class telecom circles.

"We hope to get equal if not a large share of the net additions that accrue in these circles,'' he observed. This is almost the same strategy being followed by Maxis.

With growth saturating in Malaysia, the company has already invested in the populous but under-connected Indonesia and is now looking at India.

Mr. Jamaludin pointed out that the investment of $280 million and the profits earned by Aircel from its operations in Tamil Nadu would suffice would suffice to finance the roll-out plans.

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