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Maxis’ stake declaration demolishes PC defence

Author: J Gopikrishnan
Publication: The Pioneer
Date: May 15, 2012
URL: http://dailypioneer.com/home/online-channel/360-todays-newspaper/65410-maxis-stake-declaration-demolishes-pc-defence.html

For days Home Minister P Chidambaram has pleaded innocence in the Aircel-Maxis deal, but new facts show that the acquisition of Aircel by the Maxis in 2006 was illegal.

The deal, which took place when Chidambaram was the Finance Minister, violates Indian laws. While domestic laws place a cap of 74 per cent on foreign investment in telecom sector, in the Aircel-Maxis deal, the latter acquired nearly 100 per cent stake in three tranches.

Equally shocking is the fact that a probe instituted by the Finance Minister and Department of Telecom in early 2007 to look into this violation, has reached nowhere. The Government has so far not initiated any action against Maxis.

On March 15, 2006, Maxis declared to the Malaysian Stock Exchange that it proposed to acquire 99.714 per cent in Aircel. This was before the Foreign Investment Promotion Board (FIPB) — under Chidambaram — cleared the so-called final acquisition on October 3, 2006.

“Aircel Transactions comprising:

(I) Proposed acquisition by Global Communication Services Holdings Ltd (GCSHL), a wholly-owned subsidiary of Maxis, and Deccan Digital Networks Private Limited (JVC), a proposed joint venture company of Maxis in the Republic of India, of 94,864,865 and 85,135,135 equity shares of 10 Indian Rupees each in Aircel Limited (Aircel), a company incorporated in the Republic of India (“Aircel Shares”), representing 39% and 35% respectively, of the enlarged issued and paid-up share capital of Aircel from Aircel Televentures Limited for a cash consideration of $422 million and $378 million respectively.

(II) Proposed joint venture between GCSHL and Sindya Securities & Investments Private Limited in relation to their participation in the JVC.

III) Proposed put and call options over GCSHL’s 63,243,243 Aircel Shares representing 26% of the enlarged issued and paid-up share capital of Aircel for a cash consideration of US$280 million (“collectively Aircel Transactions”),” said the declaration made by Maxis to Malaysian Stock Exchange (Bursa Malaysia) on March 15, 2006.

Maxis filed this declaration to stock exchange through their banker RHB Sakura Merchant Bankers. This declaration shows that Maxis proposed to purchase Aircel shares in three tranches --- first 39 per cent and then 35 per cent and last 26 per cent, at around Rs 4,000 crore. But another document filed by the Maxis to the Malaysian stock exchange says the last tranche was proposed to be of 25.714 per cent share in Aircel.

The declaration also shows that apart from direct purchase, Maxis acquired Aircel shares through Joint Ventures with Deccan Digital Networks Private Ltd and Sindya Securities and Investments. These two Indian companies were controlled by Sunita Reddy, who belongs to Appolo Hospital Group.

The Maxis declaration itself could be a prima facie evidence to cancel the license of Aircel, apart from initiation of cases for cheating the Government. But even after six years of the deal, the Government has not acted on it. Reacting to violation of the Indian law by Maxis, Chidambaram said in the Rajya Sabha on Monday, “Let law take its own course.”
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