Tuesday, 12 December 2017

Aircel's days numbered but sell-off will not be simple

By Mary Lennighan, Total Telecom
Wednesday 08 November 17

Another Indian mobile operator is planning its exit from the market, but it will likely split up its assets among rival players

Aircel could be coming to the end of the road in India's mobile market, following the failure of its bid to merge with Reliance Communications, local press reports predict, but with legal issues hanging over its spectrum holdings, there will be no easy exit route for the telco. India's sixth largest mobile operator could well end up selling its customer base to one of its rivals and its infrastructure assets…

Aircel could be coming to the end of the road in India's mobile market, following the failure of its bid to merge with Reliance Communications, local press reports predict, but with legal issues hanging over its spectrum holdings, there will be no easy exit route for the telco.

India's sixth largest mobile operator could well end up selling its customer base to one of its rivals and its infrastructure assets, including towers, to another, the Economic Times reported earlier this week, citing various analyst interviews.

Bharti Airtel is the most likely buyer for Aircel's 89.9 million customers, the paper said. The current market leader will be overtaken by a merged Vodafone/Idea Cellular, once that deal closes early next year. However, it noted that Vodafone/Idea might be willing to pay a higher price for Aircel's subscribers.

The paper did not name a possible buyer for Aircel's portfolio of 40,000 telecoms towers.

Aircel is looking at being broken apart because at present it would not be permitted to sell its spectrum, the Economic Times explained. A court order prevents Aircel from selling its 2G and 3G spectrum – it does not hold any 4G airwaves – and has threatened the operator with the cancellation of its licences in a case related to alleged corruption around Maxis' acquisition of shares in Aircel.

The Maxis case was one of a number of reasons for the failure of Aircel's merger with RCom.

The telco's called off their proposed tie-up a month ago, noting that "legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction."

Both companies needed the deal to go through to enable them to survive in the increasingly competitive Indian mobile market. RCom is now in the process of closing down its consumer telecoms operations in India, with a view to selling off its spectrum and other assets to pay down debt.
 
Should the courts lift the ban on Aircel selling spectrum then it could pursue a sale of the company as a whole, the Economic Times said.

However, it is unlikely to go down the bankruptcy route, since that would invoke Maxis' bank guarantees, leading to further legal difficulties, it said.

Aircel's debt burden stands at around 200 billion rupees (€2.7 billion), it added.

RCom and Aircel are not the only ones being forced into making difficult decisions in India.

Last month Tata Group agreed to sell its consumer mobile businesses to Bharti Airtel on a cash-free and debt-free basis, aside from Bharti agreeing to assume a portion of Tata's unpaid spectrum liabilities with the Department of Telecommunications (DoT). The deal marks the end of years of speculation over Tata's future in mobile.

Please enable JavaScript to view the comments powered by Disqus.

Newsletter signup

Quickly get on board and up to date with the telecoms industry