Prominent investor C Sivasankaran has re-entered the fledgling Indian telecom industry by acquiring a 51% stake in Chennai-based telecom firm S Tel, three-and-a-half years after it pulled out of Aircel. The deal size is estimated to be around Rs 1,150 crore, said a person close to the development.
Sivasankaran’s investment arm Sterling Infotech Group (SIG) has bought the stake in S Tel, that has licences to operate in several northern and eastern states, from two private equity firms — Skycity Foundations and Telecom Investments. S Saravana, Mr Sivasankaran’s 22 year old son, has joined the S Tel board, post the transaction. ET on May 2 reported that Siva was looking for a presence in India’s telecom space and was in talks to acquire a majority stake in S Tel.
The other 49% in S Tel is held by Bahrain Telecom (Batelco) which bought the stake recently for Rs 1,100 crore. Batelco has operations in seven markets across the Middle East, North Africa and Asia. The telco reported revenues of $891 million and a profit of $276 million in 2008.
When contacted, a senior S Tel official told ET: “We would make an announcement relating to the deal in about a fortnight.” S Tel’s website makes a mention of two promoters — Batelco Millennium India Company (BMICL) and SIG. E-mails sent to SIG and S Tel remained unanswered.
S Tel has a start-up spectrum to provide mobile services in Bihar, Orissa, Jammu & Kashmir, Himachal Pradesh, Assam and the North-East. The company has shifted its headquarters from Chennai to New Delhi. Shamik Das, who was earlier with Bharti Airtel as COO, Bharti Telemedia (Southern Hub), has been appointed S Tel’s CEO.
Siva, as he is popularly known, was barred from buying more than a 10% stake in any Indian telecom company for three years as part of a non-compete clause he had signed with the Maxis when he sold his stake in Aircel to the Malaysian company $1.08 billion in 2005. The three year period came to an end in March this year. Sources close to the development said Siva finalised the deal early this week. SIG, the Singapore based company has a turnover of over $3 billion.
Historically, Mr Sivasankaran has sold his business when at peak valuations. Apart from the sell-out of Aircel to Maxis, he sold Dishnet DSL to Tata Communications in 2004. Today, he holds around a 8% stake in Tata Group company, Tata Teleservices which was acquired for Rs 1,200 crore in 2006. Earlier last month, he bought a majority stake in a DLF-Akruti SPV for Rs 310 crore.
S Tel has Unified Access Services Licences — government parlance for telecom licences that allow wireline as well as wireless services in a service area — and start-up spectrum in Bihar, Orissa, Jammu & Kashmir, Himachal Pradesh, the North East and Assam.
It also holds a Category A ISP licence that allows it to provide broadband services across the country.
Last year, S-Tel attracted attention when it offered to pay Rs 13,752 crore to the government for a pan-India spectrum. Earlier in 2008, it was reported to have doubled the offer of revenue to the government for licences in all 22 circles for which it had applied for.
One of the fastest-growing markets in the world, India had 429 million users at the end of March, the vast majority of them mobile users.
Source: EconomicTimes