Maxis takes damage control measures on Aircel deal

Maxis-run Aircel sent out a mass mail to its India employees a few days earlier, telling them it was business as usual in the telecom company. The mail, put out by the top management, stated that there was no cause for worry and that things will carry on like before. In the backdrop of the investigations into the Maxis-Aircel deal of 2005, that has drawn textile minister and former telecom minister Dayanidhi Maran into the controversy, the CEO’s memo is significant.

Maxis CEO Sandip Das, who’s been based in Kuala Lumpur (Malaysia) for many years, is now in India, shuttling between Mumbai and Delhi, it is learnt. He was not available for comment.

The report by the Shivraj Patil committee, investigating 2G telecom licences issued since 2001, has said top DoT officials, during Maran’s tenure as the telecom minister, were part of the process in delaying licences to Aircel till C Sivasankaran held the majority stake in the company. The report has hinted at DoT favouritism towards Aircel in granting licences once Sivasankaran sold his stake to T Ananda Krishnan-owned Maxis, a Malaysia-based group.

The Central Bureau of Investigation (CBI), which is probing the Maxis-Maran connection and its impact on the Aircel deal, is likely to question DoT officials. There are also suggestions that CBI may talk to the merchant bankers engaged for the Aircel-Maxis deal in 2005.

A top CBI official told this newspaper, “It is very early days yet. We will decide all these issues at the appropriate moment.” Said another, “There's a lot of homework that needs to be done before we go out to question anyone.”

Aircel founder and Sterling group chairman C Sivasankaran, in his statement to the CBI, is learnt to have named 10 persons as witnesses in connection with the deal struck between Aircel and Maxis six years before. Among others, Maxis group owner T Ananda Krishnan, Astro top executive Ralph Marshall, and a senior official of a foreign bank have been named as witnesses. Astro runs the media division of Maxis.

CBI will cross-check the information given by Sivasankaran with the references he provided. In his statements, Sivasankaran had alleged Maran had “coerced” him into selling his stake to Maxis. Maran denied all of that.

While Maxis holds 74 per cent in Aircel, Sindya Securities & Investments Pvt Ltd owned by Suneeta Reddy of the Apollo family and her husband, P Dwarakanath Reddy, has the remaining 26 per cent in the company.

The $800-million deal between Maxis and Aircel was brokered by Standard Chartered Bank’s investment banking arm in 2005. The acquisition was completed in March 2006.

Interestingly, in 2006, Maxis was one of the frontrunners to buy the Hutch stake in its India operation, Hutchison Essar. Vodafone emerged the winner in the Hutch deal. In 2007, Sandip Das stepped down as the deputy managing director of Hutchison Essar (now Vodafone) to join Maxis as its CEO.

Recently, Maxis had issued a press statement saying its investment in Aircel was in full compliance with the laws of India. “At the time of the acquisition and through to July 2007, Maxis was a public company listed on the Malaysian Stock Exchange and the details of the investment into Aircel was fully disclosed to the Malaysian Stock Exchange and Maxis' shareholders,” it said. It added that the acquisition of Aircel from Sivasankaran was made after a negotiated process in which both parties had extensive professional advice.