Is the story over for Aircel?

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Bapun

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Is it the end of the road for Maxis (owner of Aircel) in India? If a decision of the empowered group of ministers (EGOM) headed by the union finance minister P. Chidambaram is an indication, then it will become very difficult for Aircel to survive in India.

On November 2, the EGOM decided that a company acquiring an existing operators will have to pay market price of the spectrum to the government.

“If two companies that hold 'spectrum at administered price' were to merge, the joint entity would have to pay the market value for the airwaves for the remaining tenure of their permit with prospective effect,” said Kapil Sibal, union Communications minister.

“The decision has been taken primarily in view of the recent news appearing in various section of media that Aircel wants to sell its operations,” an official told reporters after the meeting.

“This will make it difficult for the incumbent operators to sell their companies,” said B. K. Syngal, a New Delhi-based telecom analyst.

Aircel’s valuation will be based only on the spectrum that it owns. The company is making losses between $80 and $100 million every month. It does not figure among the top five telcos in terms of revenue earned. In last one year or so, Aircel has removed all its top management in India.

Since all the spectrum held by Aircel, except in Chennai and Tamil Nadu, was issued to it under the policy of first-come-first-served (FCFS), the buyer will have to pay the market price for it.

Aircel is facing cash crunch. It is looking for a buyer and was in talks with Russia-based MTS. It is very difficult for the deal to take place. Aircel, however, has always officially maintained that it is not selling out 100% equity in the company. MTS has also said that it was not buying Aircel.

The company is also under CBI investigation under criminal charges. On October 9, 2011, CBI filed an FIR against former Communications minister Dayanidhi Maran, his brother and promoter of SUN TV Group, Kalanithi Maran, T Ananda Krishnan, promoter of Maxis, Malaysia and Ralph Marshall, chairman of Maxis, Malaysia in relation to the Aircel-Maxis deal.

http://www.telecomtiger.com/PolicyNRegulation_fullstory.aspx?passfrom=breakingnews&storyid=16058&section=S174
 
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