Friday, February 04, 2005

Aircel's 49% up for grabs

Russia's Sistema in deal to pick up 49% in Aircel- The Economic Times

Hutch had offered to buy Aircel for about Rs. 1,600 crores, but the deal got embroiled in regulatory mess. Informed sources say that Sivasankaran was too close to Jayalalitha (which I am not so sure about), and Dayanidhi Maran wanted to scuttle this deal. Such rumours always exist, but the reality may be something more complex.

Anyway, today's news items across multiple newspapers indicate that Russian company Sistema is offering to pick up 49% stake. Idea Cellular is also keen to buy Aircel. In case of Idea it will be a complete outright purchase as they have no footprint in Tamil Nadu. Hutch won't anymore get involved with Aircel.

The telecom consolidation in India cannot happen without smooth regulatory cooperation. With the FDI limit in telecom having been taken to 74% (with due security provisions, we are told), despite Left protesting vehemently, more investment from abroad is likely. But such investment will be wasted if the sector cannot be consolidated into 5 or so players. Tatas should exit Idea as soon as possible to facilitate Malaysian Telekom taking a lead in pushing Idea forward. I guess AV Birla group is unclear about whether to continue holding stakes in Idea or offload them.

Groups like Spice Telecom (Karnataka, Punjab), BPL (Tamil Nadu minus Chennai, Mumbai, Maharashtra minus Mumbai, Kerala) and a few other teeny weeny players should exit the market after getting a decent return on their investment. They cannot grow and cannot offer quality services on their own.


  1. Badri, i agree on certain views. Going by Gartner's view, India will at the maximum have 5 players. Bharti, Reliance, Tata, Hutch and probably Idea. I am not sure about the Aircel mess but the fact is as of today, Hutch has consolidated its operations in India. So that gives much better financial muscle for them to work around. Essar will eventually sell their stuff to Bharti, is what i read in Business today some weeks ago. But the problem now will be...all these players either take a city centric circle or state circle.

    In the case of rural connectivity, things are actually very poor in India. Except for n-logue, which has an ISP license as rural connectivity service provider, none of the biggies have actually get into villages. Reliance may claim they are everywhere in India, but it is not true. By pushing rural connectivity, far more things can happen to India. More than a mobile phone, that will actually transform their lives.

    Have you heard of the true story of how a village has gained tremendous productivity & education, simply by providing cycles for the women of that village. Sheela Rani Suganth was the then collector in TN for that revolution.

  2. Dear Badri:- As a word of introduction: I am a 75 year old blogger from U.S.A(at prsrnt).Though my ares of interst are different from those of you who are I.T ians and the sculptors of a Grand, modern India,yet I do take interest in matters of I.T.I entirely agree with U that there shall be no more than 5 players in the field serious to do business as well as service.I am a Hutchian from day 1 and a number of times i was at loggerheads with them for poor service.People like B.P.L etc who are not serious or who are not having the wherewithall and as Ur commentator Narain observes who are city centric should go.Also Narain's observation that rural connectivity is palpably poor is an undeniable fact.
    I intend reading all your posts and pl do keep it up.I have one requst to don't go anywhere near is destructive.Any well intended sympathy for the woman or men politicians is a waste.
    All the best to you and your team
    My blog is ><
    My son's is >chennaicentral.blogspot .com<
    He is also collecting info on city wise and country wise list of Indian Bloggers in his><
    My E.Mail is >
    Parthasarathy Krishnaswamy

  3. Hi Badri,
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