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Maxis bids for India’s Hutchison Essar

Maxis Communications Bhd has made a bid for a controlling stake in India’s Hutchison Essar, the fourth largest mobile operator there, in an effort to further stamp its presence in the Indian market, according to press reports from India.

Hutchison Essar, with over 22 million subscribers, is 52%-owned by Hong Kong-based Hutchison Telecommunications International (HTIL) and is valued at around US$14 billion (RM49.71 billion).

It was reported that Egypt’s Orascom and India’s Reliance Communications had submitted bids for Hutchison Essar after talk of the impending exit of HTIL from the Indian market before 2008.

Maxis’ bid is the second made by the Malaysian company after its initial US$13.5 billion bid with US private equity firm Texas Pacific Group was rejected.

The Financial Express of India reported that Maxis had engaged Standard Chartered as its adviser for the bid. It also said Reliance had tied up with four US private equity firms for its bid.

The addition of Hutchison Essar to Maxis, which already owns 75% of Aircel Ltd, would make the company the third largest mobile operator in India with over 26 million subscribers.

Analysts said the move would provide Maxis with a larger network to further tap the Indian telecommunications market where penetration is at 10%.

“India has a population of 1.1 billion people and 10% penetration is very small. This is a very viable market for Maxis and the voice market there is very big.

“Of course they can choose to grow organically with Aircel but this bid could be for a long-term investment,” she said.

Another analyst said the acquisition of Hutchison Essar would cement Maxis’ position in India and increase overseas contribution to its revenue. Aircel currently contributes 9% to Maxis’ turnover.

Last week, Maxis announced it had paid the necessary prescribed entry fees to India’s Department of Telecommunications to operate in the remaining 14 circles there.

The entry fees are reported to have cost Maxis US$300 million. In addition, Maxis has allocated RM1.7 billion in capital expenditure for Aircel this year to expand network coverage in its existing nine circles.

On Dec 6, Maxis appointed Sandip Das of Hutchison Essar as chief executive officer of the company’s Malaysian operations from Jan 15, 2007. It had said then that Sandip would also play a key role in developing strategies for Maxis’ operations in India.-TheEdgeDaily

 

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy