Maxis puts Aircel Cellular rebranding on hold

Maxis Communications, Malaysia’s largest telecom operator, has postponed rebranding of Aircel Cellular (in which it has 74% stake) to Maxis.

This is because it is in the race to buy Hutchison Essar (HEL) and feels that if it wins the bid for the No 3 Indian telco, it could merge it with Aircel Cellular for a combined rebranding exercise.

Aircel’s name will be changed only after Hutch promoters declare the name of its acquirer. As ET had reported, Maxis Communications had put in a fresh bid for Hutchison International’s (HTIL) 67% stake in HEL last week after its earlier bid (jointly with Texas Pacific Group) was rejected. Maxis has gone alone for its second bid.

Sources said that Maxis officials had initiated talks with Hutchison Whampoa’s group MD Canning Fok last week and the talks are still on due to the new bid. Standard Chartered is advising Maxis Communications. HEL has 22.3 million subscribers (November 2006 figures) and a market share of 22.1% in the GSM space.

Aircel has 4.2 million customers and 4.2% market share. A successful buy-out of HEL will catapult the Maxis-Aircel combine to the third slot in India, behind Bharti Airtel and Reliance Communications. Maxis has always maintained that the company was looking at a larger footprint in the world’s fastest growing cellular market.

Last year, it had bought 74% in Aircel Cellular for $1.08 billion. Recently, Maxis, paid $300 million to the Indian government as entry fee for 14 circles and for national and international long distance licences for Aircel Cellular. Reliance Communications, however, continues to be the front-runner for acquiring HEL. Maxis has put in its bid despite speculation that R-ADAG would close the deal on December 28 (Dhirubhai Ambani's birthday) for an estimated $12-14 billion.

The R-ADAG group, which is being advised by UBS, has reportedly tied-up with private equity players like Black-stone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, to finance the buy-out. Anil Ambani has been looking at an aggressive expansion in GSM, the technology used by 70% of India’s mobile population.

HEL will give Reliance Communications a ready GSM presence in 16 circles with a robust customer base of over 22 million, most of whom are high-end users and corporate customers. Macquarie Securities India, in its research note on Monday put the enterprise value of HEL at $ 13.7 billion and an equity value of $12.8 billion.