Reliance Communications interested in Aircel to expand GSM footprint

Anil Ambani’s Reliance Communications is looking at acquiring a controlling stake in Aircel Cellular Ltd. by buying out stake from Malaysian company Maxis Communications, who hold 74% stake and possibly from promoters of Apollo Hospitals who hold remaining 26%.

Aircel’s main operations are in Tamil Nadu and Chennai circles while it has got licence for a pan-India rollout. This make strategic fit for Reliance Communications as it can GSM licence and the necessary spectrum. It could also divert its slow growth rate in CDMA business in comparison to other GSM players.

For Maxis, it could mean getting a partner which has a national presence, strong brand, professional management and established infrastructure.

TRAI is also expected to allow for free competition, removing the 10% ceiling for a mobile firm to hold stake in companies in a single circle. It is also expected to allow for running both CDMA and GSM services under the same operating licence.

However, given Aircel’s lesser known brand name nationally and scale of operations, it may command lesser premium as seen in the recent Hutch-Vodafone deal. Also, given unclarity in Reliance Communications plans for GSM business and unstable guidelines, it may be a while before the deal actually takes place. Source