Monday, January 02, 2006

Sivasankaran sells Aircel, finally?

From The Hindu:
Maxis and Reddy family join hands to buy Aircel

Malaysian Telecom company Maxis and Chennai based Apollo Group have together worked out an agreement to subscribe to fresh equity and buy out Sivasankaran's equity in Tamil Nadu based mobile service provider Aircel.

Aircel first talked about a takeover by Hutch, which did not happen. Required Government clearences did not come through, and there were talks of differences in valuations that sprung up suddenly. Subsequently Aircel talked about possible equity investment from a Russian mobile operator. Nothing came of that as well.

Sivasankaran may be hoping that the current deal goes through.

Aircel was a pioneer in mobile phone pricing in India. Even by the year 2000-01 Aircel had made mobile to mobile call in Tamil Nadu (minus Chennai) equivalent of landline calling. (Rs. 1.20 for three minutes of call)

For a single circle operation and that too, without a major metro not part of it, Aircel was growing fast and had reached profitability. However, there was no pan-Indian plan. There was not enough money for an all-India-wide growth. Aircel bought RPG of Chennai circle to expand the operation to whole of Tamil Nadu, but that was it. Some licenses were acquired for North East etc. but no roll-out has happened.

So all Sivasankaran could hope was to exit and make good money in the process.

Maxis gets an entry into India. But if it wants to be a serious player, it needs to grow large, and cover the whole of India. But that may not be easy. Under the current unified licenses scheme there are six telecom operators in the fray almost all across, and some stray operators here and there. In any circle, there are no more than four operators in the GSM spectrum.

Maxis will have a future only if it actively

(a) looks at acquiring operations of Spice in Karnataka and Punjab
(b) acquire rump operations of Reliance GSM in circles such as West Bengal, Madhya Pradesh etc.
(c) Figure out a way to acquire Idea Cellular or at least work out a model to buy Tata's stake in that company and introduce a common brand across India
(d) Start in circles where no fourth GSM operator is present. For example, after Hutch-BPL merger, Bombay is going to have only three GSM players. Idea would also be seriously looking at that market.


An operation purely focused on Tamil Nadu may not work out for any long term player.


  1. Since Sivasankaran has close ties with the TATA Group he might have promised Aircel that he can broker some deals between Tatas and Maxis. This might have prompted Maxis to buy into Aircel first and then look for a pan-Indian presence.

  2. Another aspect of Sivasankaran that interests me is that he has become very good in making money in identifying an opportunity, developing it and selling it at the right time for attractive valuations.

    So, maybe he never had any pan India ambitions with Aircell and was nurturing it with an intention to sell at the right time.

  3. Hi,

    In Tamilnadu Aircel is number one. No doubt about that. Pressure from Karunanithi family forced Sivasankaran to sell his company.

    Telecom minister is from this family.

    This family gave lot's of troubles to Aircel. So this is the main reason behind this deal. Who much money this family got from the Malaysian company....?


  4. sir
    we are working for sterling and has project of dwl in tata teleservices.
    so after siva deal, i ma afraid of my job and about other sterling peoples.....
    but mind that we are and we were nery labourious.

  5. The management team of Aircel Team at Delhi works at cross purpose with the Chennai office and are a blot to Maxis culture....

  6. i just happend to saw ur blogger , when i need something from tamilnadu.

    My View,

    i know my ex-boss is a good busimess man(there is a saying in tamil,settiyar athula pottalum , alanthuthan poduvar).

    so dont go much into technical, political views on this mater.

    and one guy is polambing about his job security, f off, if he needs and has stuff he has to work company like infosys, wipro , vodafone ,or even at saravanabhavan.


  7. aircel is now owned by none other than MARAN brothers. REDDY'S (APOLLO) have always proved their loyalty by behaving as the right BINAMI.