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Business News/ Industry / Telecom/  Sistema seen nearing deal on Aircel stake
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Sistema seen nearing deal on Aircel stake

Both companies deny that a deal is in the works, but the buzz around it just keeps getting louder

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New Delhi: Has Sistema JSFC finally struck its long-rumoured deal to buy out all or part of Malaysian firm Maxis Communications Bhd’s 74% stake in Indian telco Aircel Ltd?

Both Sistema and Aircel deny that a deal is in the works, but the buzz around it just keeps getting louder.

A person closely associated with Aircel and familiar with the transaction claimed it had.

The Economic Times had earlier estimated the deal’s value at around $3 billion.

Independently, another person who is associated with Aircel confirmed the deal.

And a third person, a government official familiar with goings-on in the Russian telco, that has through the Russian government lobbied the Indian government regarding the cancellation of its second-generation (2G) telecom licences, said that the acquisition couldn’t be ruled out.

None of the three wanted to be identified.

“Aircel is not aware of any such development you referred to. If and when anything happens on that front, we will surely share it with Mint," an Aircel spokesperson said in a statement.

Sistema Shyam TeleServices Ltd (SSTL) would like to categorically state that there are no plans of acquiring any telecom service provider. We also believe that such talk is mischievous and is based on sheer speculation. From the perspective of SSTL, the immediate priority is to look at the outcome of the company’s curative petition filed in the honourable Supreme Court. SSTL believes it has a strong case and is hopeful that the highest court of the land will speedily look into the merits of its curative petition and will give it justice," an SSTL spokesperson said.

Interestingly, the Russian telco stayed out of a new auction for licences to offer 2G telecom services that started last week, although its participation had been widely anticipated.

The company, which is present in India as SSTL, will see 21 of its 22 telecom licences and spectrum allocated being cancelled with the implementation of a 2 February Supreme Court ruling in a case related to the so-called 2G scam that cancelled all 122 licences issued by former telecom minister A. Raja.

Sistema said in a release last week that it had been unfairly penalized by the court’s order and had filed a curative petition. The telco has also simultaneously been working on the Indian government through the Russian government.

If the court doesn’t rule in favour of Sistema, or if the deal with Aircel doesn’t go through, the telco’s subscribers (around 16 million) will see their phones going dead in January.

Experts have been predicting a coming consolidation in the Indian telecom business, and say there will only be around three or four large telcos a few years from now.

“Consolidation has accelerated with the cancellation of 2G licenses by the Supreme Court. Only six operators— most of them are established players—are bidding for the 2G licences. As many operators have shut shop or are in the process of doing the same. We are likely to see three-five serious players in the market in a few a years in line with global trends. The govt should facilitate consolidation in the long-term interest of the industry so that there is fair competition by implementing clear M&A (mergers and acquisitions) rules," said Hemant Joshi, a partner at Deloitte, Haskins and Sells.

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Published: 22 Oct 2012, 07:08 PM IST
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