Unfazed by the controversy surrounding the 2G spectrum scam, Aircel, in which Malaysia-based Maxis Communications holds 74 per cent stake, has chalked out ambitious plans to remain competitive and transform itself as a key player in the emerging market for data-led telecom services. The company has readied an investment of Rs 7,500 crore to expand its network in the third-generation (3G) telephony and wireless broadband (BWA) segments, besides exploring the possibility of a public listing in the next two years.
In an exclusive interview with Business Standard at Aircel’s Gurgaon headquarters, Maxis Communications chief executive officer and Aircel director Sandip Das said, “We have invested about Rs 45,000 crore in the company. We are not a fly-by-night operator. It is a serious investment and we want to be a serious player here. We’ll make a fresh investment of Rs 7,500 crore, a mix of debt and equity.”
He said in the next year or two, the big task was to build a strong organisation, whose valuation was in line with the investments the parent had made. Das said if need arose, the company would look at all options to raise money, including an initial public offer.
In 2005, Aircel’s original promoter C Sivasankaran sold the company to the T Ananda Krishnan-promoted Maxis Communications and Sindya Securities & Investments Pvt Ltd, owned by Suneetha Reddy and husband P Dwarakanath Reddy. For the first time, the company’s name appeared in the 2G spectrum controversy last year, following a CBI (Central Bureau of Investigation) probe into the spectrum allotment process from 2000 onwards. The CBI has filed a case against Dayanidhi Maran, the telecom minister when the deal between Aircel and Malaysia’s Maxis was struck, Maxis owner
T Ananda Krishnan and Maxis Director Ralph Marshall. It has been investigating the money trail between the Maxis Group and companies owned by the Marans.
CBI officials had said the Marans received kickbacks from the Malaysian firm in the form of investments into Sun Direct after the Aircel-Maxis deal. Earlier, the CBI had also told the Supreme Court that Maran had deliberately delayed the issuance of a letter of intent to Aircel when it was owned by C Sivasankaran. The company, which is the fifth largest Indian telecom operator, has 50 million subscribers. Partly due to the 2G taint, there were reports that Aircel was looking for buyers.
Denying the reports as mere speculation, Das said there was no proposal for a change in ownership and the company was not up for sale. In fact, Das said he was already thinking about the next phase of Aircel’s journey. The company recently restructured itself into two divisions, operations-led OpCo and network-led NetCo, with plans to spin them off into separate companies once the contours of the in-the-works New Telecom Policy would become clear.
"We have built a structure where in future the sales, distribution and customer-facing areas will be separated and we took this call six months back as we are moving towards a phase of network-sharing. Our plan is clear: Build a nationwide 2G network and have a strong data infrastructure. Aircel's 3G network is the most modern currently, it is HSPA+ and then, we are banking on BWA," Das said. Under the new structure, the company will share its network with other telecom players, creating an additional revenue stream.
But, what about the current restructuring process leading to an exodus of top managers, chief operating officer Gurdeep Singh and chief technology officer Mallikarjun Rao, among others, for instance? According to Das, "Some of the changes have been happening. Over a four-five year circle, every organisation goes through a 'refresh'. Recently, two large Indian telcos had gone for major organisational changes, far larger than in our case. We are now building skills and strengths and getting ready for the next phase. We have taken a very brave decision… when you do new things, everybody asks."
According to him, Aircel has spent close to Rs 10,000 crore on 3G alone, besides spending about Rs 3,500 crore in acquiring BWA spectrum. Aircel's journey could be traced back in phases, he said. First, the pre-2005 period and then post-2005, when the new shareholders, including Maxis, came in and the nationwide network was built and the company positioned itself as a pocket internet company.
"We are now ready for our third chapter. In one year, if you look at the percentage of our revenues that came from non-voice services, it has come up from the bottom of ladder in the industry to one of the highest in the industry, at 18 per cent. The future is data. The next tsunami of growth will be broadband," Das added.
Currently, the company has over one million 3G subscribers in 13 circles and expects the number to increase rapidly. In BWA, the company is hoping the whole ecosystem would be ready within a year, which will allow it to go ahead with the launch of LTE services in eight circles where it holds spectrum.