Malaysian Tycoon Ananda Krishnan plans to buy Maxis communication - Aircell India to gain from plans

Malaysian tycoon Ananda Krishnan plans to buy out the country’s largest mobile operator, Maxis Communications in a deal that could be worth at least $5 billion. Maxis gave no reason for the buyout plan but industry analysts speculated that Krishnan, the country’s second-richest man after Robert Kuok, might want to relist Maxis offshore and raise foreign capital to fund international expansion. Maxis, which faces a price war and a maturing market at home, is expanding into larger and less-developed Asian markets like Indonesia and India to drive growth.
Maxis can be listed overseas, feels telecom analysts , the buyout plan could be a first step toward raising money to fund major investments in India and Indonesia. Krishnan-controlled firm Usaha Tegas, a major shareholder in Maxis, has notified the company that it and its affiliates will make an offer by Thursday, Maxis said. Krishnan, a self-made billionaire of Sri Lankan origin, held an indirect interest of 47.05% in Maxis as of April last year, according to company data. At the current share price, a buyout bid for the remainder of about 53% would cost around 17.4 billion ringgit ($5.1 billion).

Malaysia’s mobile phone market is fast reaching saturation, forcing Maxis and smaller rival, state-controlled Telekom Malaysia, to expand overseas for growth. In Malaysia, more than three-quarters of the 26 million population own a mobile phone. Maxis stock, which was suspended from trade before the company statement, has climbed nearly 50% in the past 12 months, outperforming the wider market by about 7%. The stock fetches 16.2 times projected earnings, compared with India’s top mobile phone services firm, Bharti Airtel, on 38 times and China Mobile on 18.2 times.

Ananda Krishnan’s plans to buy out Maxis Communications will boost the company’s plans for India, say analysts. Mr Krishnan owns just under 48% of Maxis, which has a controlling stake (74%) in Aircel, India’s fifth largest GSM player with over 5 million subscribers. More so, considering that Maxis had recently said that it would need an additional $3 billion to expand operations in India in the future. Maxis two overseas ventures — India’s Aircel and Indonesia’s PT Natrindo Telepon Selular . The company’s profits have surged 46% over the last 12 months riding on strong subscriber gains both at home and in India. In fact, Aircel accounted for 13% of Maxis’s fourth-quarter revenues. The company plans to invest over Rs 2,000 crore in its Indian operations in 2007-08, as it has set a target of reaching 8 million subscribers during this period. In the last fiscal, Maxis had invested about Rs 2,700 crore in Aircel, of which Rs 1,350 crore was paid to the Department of Telecom (DoT) towards entry fee for licenses in 14 new circles in the country, while the remaining was spent on network expansion. Aircel holds licence to offer telecom services in 9 telecom circles in the country and aims to be a pan-Indian player and expand its presence to all 23 circles by the first half of 2009. As the first step, the company recently launched services in both Himachal Pradesh and Bihar. Aircel was recently been granted both the national and international long distance licences by DoT.

The reclusive 68-year-old Krishnan, a former oil trader, also controls Malaysian pay-TV operator Astro All-Asia Networks and gambling and leisure firm Tanjong. The Harvard Business School graduate, with a net worth of $6 billion according to Forbes magazine, was a close friend to former premier Mahathir Mohamad.

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