Financial Daily from THE HINDU group of publications
Friday, Aug 20, 2004
Regulatory Bodies & Rulings
Info-Tech - Telecommunications
Hutch's Aircel buy hits DoT hurdle Clarification on equity structure sought
Thomas K Thomas
New Delhi , Aug. 19
HUTCH plan to acquire Aircel Cellular may have hit a minor bump with the Department of Telecom seeking clarification on the equity holding structure of the acquiring company.
According to senior officials in DoT, clarifications were required since Hutch had sought to acquire the C. Sivasankaran-promoted company through its sister concern Aircel Digilink.
"We have asked the company to give us the details of the equity holding before we can give the approvals," said a DoT official. Industry sources privy to the deal, however, told Business Line that discussions were on between Hutch and DoT to sort out the snag. They said that all clarifications were being given and the acquisition would be completed as per DoT guidelines on intra-circle mergers and acquisition.
The problem had arisen because Hutch chose to acquire the Chennai-based mobile company through one of its subsidiaries Aircel Digilink rather than merging it with its existing mobile services subsidiary in Chennai -Hutchison Essar South Ltd.
According to sources, there was no clarity on whether the approvals were required under the intra-circle merger guidelines or under the inter-circle acquisition norms.
In June, Hutch had announced the acquisition of Aircel from Sterling Infotech, which operates cellular services in Chennai and Tamil Nadu circles. Market sources put the deal amount between Rs 1,200 crore and Rs 1,600 crore, making it the largest single telecom deal in the country.
It was an all-cash deal. Other operators including Idea Cellular and Bharti Tele-Ventures were also in the fray to acquire the company.
While Aircel has a subscriber base of 3.4 lakh in Chennai, Hutchison Essar has 2.1 lakh users. If approved, this will be the first intra-circle merger transaction since the announcement of the intra-circle merger guidelines.
Hutchison hopes to integrate the two networks in Chennai as one (Aircel) operates on the 900 MHz frequency and the other (Hutchison Essar) on the 1,800 MHz frequency.
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