Malaysian operator Maxis is considering pouring as much as $1.1 billion into its Indian unit Aircel following the collapse of its merger agreement with Reliance Communications.
The merger between Aircel and RCom first emerged in December 2015 and seemed set to close this year, but RCom pulled out at the last minute citing “inordinate delays caused by legal and regulatory uncertainties”. Aircel sold its 4G spectrum to market leader Bharti Airtel to comply with the terms of the merger, and reports have since suggested that Aircel may shut down its Indian operations entirely.
However, Maxis appears unwilling to let this happen. Maxis’ owner Ananda Krishnan has seemingly invested $7 billion into Aircel across the last decade without seeing a return on this, yet has suggested that he could funnel at least $500 million more into the unit in order to drive further investment. The final amount would be based on Aircel’s proposals for resolving its INR15.5 billion ($241.3 million) debt.
Indeed, unless Maxis finds an acceptable way of restructuring this debt, its rescue mission for the ailing operator may fail. Fortunately it appears that Maxis has a contingency plan well underway, with reports indicating that Aircel is holding advanced discussions with Airtel over the possibility of a network sharing or roaming deal with would help it compete more effectively.
The group’s strategy will focus on providing capital in the telecom circles where it has the best track record for performance. These include Assam, Jammu & Kashmir and Tamil Nadu. It is also looking to boost its capacity to facilitate its data services offering.
Competition has been cutthroat in India since Reliance Jio entered the market in September 2016 offering its services for free, or heavily discounted. Its advent spurred a wave of consolidation, with Aircel and RCom’s unsuccessful merger joined by Airtel acquiring the Indian operations of Telenor and Tata Sons, as well as a mega-merger between second and third placed operators Vodafone India and Idea Cellular.