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Aircel-Maxis deal: A timeline
The Hindu, August 21, 2015
April-May 2011: The Aircel-Maxis deal came under the scanner after Aircel owner C. Sivasankaran lodged a complaint with the Central Bureau of Investigation alleging that he was pressurised to sell his stakes to Maxis.
September 2011: The Arbitral Tribunal rejected Mr. Sivasankaran’s allegation regarding breach of obligations on the part of buyers in undertaking an IPO of Aircel. The tribunal directed him to pay Maxis’s legal costs of $7.9 million, of which at least $1.4 million was paid. The award was not challenged.
October 2011: The CBI filed a case alleging that Mr. Sivasankaran, who had applied for spectrum licence, was coerced into selling his company to Maxis. It is later alleged that the Maxis Group, which bought 74 per cent stakes in Aircel in March 2006, invested Rs.742 crore in Sun Direct between 2007 and 2009.
May 2014: The CBI told the Supreme Court that there was difference of opinion between the CBI Director and the prosecution regarding filing of the charge sheet. On reference, the Attorney General opined that there was enough prosecutable evidence.
July 2014: Maxis Communications Berhad on July 25 urged Finance Minister Arun Jaitley that it be treated in a fair manner, citing a contrary opinion by two retired Chief Justices of India.
August 2014: The CBI on August 29 filed charge sheet against former Telecom Minister Dayanidhi Maran and his brother Kalanidhi Maran; T. Ananda Krishnan, owner of Malaysian company Maxis; Ralph Marshall, a senior executive of the Maxis Group, and four companies, including the Sun Direct TV Pvt. Ltd.
February 5, 2015: The Marans moved the Supreme Court challenging the 2G Special Court’s decision to summon them in the Aircel-Maxis case.
February 6, 2015: The Supreme Court recalled its order refusing to entertain petitions of the former Telecom Minister Dayanidhi Maran and his brother, Kalanithi Maran, to quash summons in the Aircel-Maxis case issued by a special court trying the 2G spectrum scam.
February 9, 2015: The Supreme Court refused to intervene with a summons order issued by the 2G Special Court to former Telecom Minister Dayanidhi Maran and his brother Kalanithi Maran in connection with the Aircel-Maxis deal case.
March 16, 2015: Marans challenged the jurisdiction of the Special CBI Court over the Aircel-Maxis deal case.
April 1, 2015: The Enforcement Directorate attached assets estimated at Rs. 742.58 crore held by Dayanidhi Maran and his brother Kalanithi Maran and wife Kaveri Kalanithi.
August 3, 2015: The CBI told a special court that Malaysian authorities were not “cooperating” in the service of summons against four accused in the Aircel-Maxis deal case after which the judge issued fresh summons.
A failed venture
Malaysian tycoon T Ananda Krishnan saw India's booming market as key to his empire's future.
But Krishnan's $7 billion bet on Aircel may instead go down as one of the biggest-ever flops by a foreign investor in India.
Aircel said it has filed for bankruptcy in view of mounting financial troubles.
It was supposed to be the crowning achievement of Malaysian tycoon T Ananda Krishnan's five-decade career.
But his $7 billion bet on mobile carrier Aircel + Ltd may instead go down as one of the biggest-ever flops by a foreign investor in India, a stark reminder that doing business in the world's fastest-growing major economy is often a lot tougher than it looks.
Krishnan's holding company stands to lose all the money it poured into Aircel over the past 12 years, people with knowledge of the matter said, after the carrier filed to start bankruptcy proceedings this week. Buffeted by intense competition and regulatory uncertainty, Aircel is the latest in a long list of casualties in an Indian telecom market that only a few years ago was luring foreign entrants in droves.
While international companies have fared much better in India's buoyant consumer products and financial services industries, the turmoil in telecom is unlikely to help Prime Minister Narendra Modi's campaign to lure more foreign capital. In January, his government eased restrictions on foreign direct investment in several sectors, including single brand retail, real estate brokerages and power exchanges.
"India has always been a difficult market, even as it offers the prospects of great demographics and a billion-plus population," Sampath Reddy, chief investment officer at Pune-based Bajaj Allianz Life Insurance Co, said by phone. "The Aircel episode definitely has lessons in the offing for anyone who starts a business in the country." Krishnan, 79, spent about $800 million to purchase Aircel in 2006, when less than 10 percent of India's 1.1 billion people owned a mobile phone and the scope for growth looked nearly limitless.
By that time, the Harvard Business School graduate had already established himself as one of Malaysia's most powerful billionaires, with controlling stakes in the country's biggest mobile-phone and pay-television operators and close ties to former Prime Minister Mahathir Mohamad.
Faced with lackluster growth at home, Krishnan saw India's booming market as key to his empire's future. And he was willing to invest big to make Aircel a success.
Over the years, Maxis Communications Bhd, the holding company in which Krishnan owns a 45 percent stake, made about $3.4 billion of shareholder advances to Aircel, one of the people with knowledge of the matter said. Maxis Communications also bought $1.2 billion of common stock and subscribed to $1.6 billion of redeemable preference shares, the person said.
While he had deep pockets, Krishnan failed to anticipate how cutthroat India's telecom market would become. With nearly a dozen players jockeying for market share, call rates in the country plunged to some of the lowest levels worldwide. Competition has only intensified since 2016, when Reliance Jio Infocomm Ltd., owned by India's richest man, stormed into the market and offered free calls.
Aircel made a last-ditch effort to gain scale by attempting a merger with Reliance Communications Ltd. A setback came in January 2017, when India's highest court barred Aircel from selling or leasing its airwaves amid a broader graft lawsuit. The deal eventually collapsed in October last year.
The company summed up its dire situation in a Twitter post on Wednesday announcing the bankruptcy filing, saying Aircel had been "facing troubled times in a highly financially stressed industry, owing to intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses."
A representative for Maxis Communications declined to comment.
After Aircel, Krishnan is likely to spend more time focusing on his other businesses, which include Malaysian carrier Maxis Bhd. and pay-TV operator Astro Malaysia Holdings Bhd, the person with knowledge of the matter said. Both companies are still profitable, though their stock prices have dropped by an average 10 percent over the past year, versus a 9.6 percent gain in Malaysia's benchmark equity index, according to data compiled by Bloomberg.
That doesn't mean Krishnan is giving up on India entirely. He still controls a stake in South Asia FM Ltd, a radio broadcaster, and TV service provider Sun Direct. The businesses are performing well, and Krishnan currently has no plans to sell, the person said.