STel is set to undergo yet another change in its equity structure. Close on the heels of Bahrain Telecommunications Company (owned by the Bahrain government) acquiring a 49 per cent stake in S Tel via a joint venture with a Dubai-based private equity firm, Millennium Private Equity, for $225 million, Sahara India Investment has picked up an 11.7 per cent stake in the new licensee. While there is no clarity on the size of the deal, industry experts have pegged the amount at Rs 2.5 billion.
S Tel has telecom licences to offer wireline and wireless services. The company has recently been allocated start-up spectrum in six Category C circles ?? Bihar, Orissa, Jammu & Kashmir, Himachal Pradesh, the Northeast and Assam.
The company has also been on the radar of C. Sivasankaran, who has built a reputation as an astute entrepreneur by successfully buying, running and turning around unprofitable businesses, and then selling them for a profit. With his noncompete agreement with Malaysia’s Maxis Telecom ending in March 2009, Sivasankaran is set for another stint in the telecom sector. (According to the agreement between Sivasankaran and Maxis, he could not buy more than 10 per cent stake in any Indian telecom firm.) Sivasankaran, who sold his majority stake in Aircel to Maxis Telecom for $1.08 billion at the end of 2005, is now reportedly looking to pick up a 10 per cent stake in S Tel. The deal could involve the buyout of one of two private equity firms ?? Skycity Foundations and Mauritius-based Telecom Investments ?? that own stake in S Tel.
The industry is watching with interest as Sivasankaran makes his next move. With a quick succession of stake sales in the past year, the trend of new licensees undergoing changes in their equity structures seems to be continuing, indicating the potential of the Indian telecom sector.
