4. INTRODUCTION
• Aircel Ltd. was an Indian mobile network operator
headquartered in Mumbai that offered voice and 2G and
3G data services. It was founded by Chinnakannan
Sivasankaran and started its operations in the Tamil Nadu
telecom circle in 1999.
• Maxis Communications held a 74% stake and Sindya
Securities and Investments held the remaining 26% stake
of Aircel.
7. 2. Unsustainable Debt
• Aircel has suffered significant negative business and reputational impact due
to unsustainable debt and increased losses.
• The company had debt of over Rs 15,000 crore as of December-17.
• Aircel was unable to reach consensus with respect to the restructuring of its
debt and funding.
8. 3. Funding from Holding Company has
stopped
• Considering the financial position of the company and failure of SDR
Program, Maxis which was holding 74% equity in the company has stopped
funding the company since it felt that the company may not be able to
sustain the competition with existing market conditions.
9. 4.Failed to merge with Rcom
• Since Aircel was not able to obtain funding to continue business, it has
planned for merger with RCom (Anil Ambani’s Company) with 50% stake in
merged entity which will be named as ‘Aircom’ which will have 15% market
share.
• If that happened, Aircel could have reduced its outstanding debt by Rs
14,000 Crores. But the same was rejected by RCom due to bad reputation of
Aircel due to Aircel-Maxis scam.
10. 5. Aircel-Maxis scam & Politics
• In 2006, Maxis had taken over Aircel by acquiring a 74% stake.
• In 2011 Aircel owner C Sivasankaran lodged a complaint with the Central Bureau
of Investigation (CBI) alleging he had been pressured to sell his stake to Maxis.
• Sivasankaran also alleged that former Union minister Dayanidhi .
• BJP draged former finance minister P Chidambaram into this.
• In July 2018, CBI named P Chidambaram and his son as accused in its
supplementary charge sheet. The charge sheet named 16 other co-accused.
1.In June 2010, Aircel paid ₹ 34.38 billion for acquiring wireless broadband spectrum in eight circles: Andhra Pradesh, Assam, Bihar and Jharkhand, Jammu & Kashmir, Odisha, Tamil Nadu and West Bengal. Aircel launched 4G services in Tamil Nadu and Jammu & Kashmir in August 2014, becoming the only private telecom operator to offer all the three existing technologies of 2G, 3G and 4G in the market.
2.Aircel became the Fifth largest operator in Wireless Connections with an average share of 8.5 % in the market till the launch of Jio. After launching of Jio with penetration strategy, it started experiencing reduction in market share at a high rate which has made Aircel to reduce its prices to sustain its share which failed.
Aircel has planned for Strategic Debt Restructuring (SDR) Program whereby terms of debt may be altered with the approval of lenders and may involve conversion of a part of debt into equity.
RBI has introduced new rules for SDR soon after by making it stricter .
1.Sivasankaran also alleged that former Union minister Dayanidhi and his industrialist brother Kalanithi received kickbacks in the form of Maxis group’s investments.
2.BJP leader and advocate Subramanian Swamy had alleged that a company controlled by Karti Chidambaram, the son of former finance minister P Chidambaram, had in 2006 received a 5 per cent stake in Aircel in return for getting Maxis to pay Rs 40 billion for 74 per cent shares of Aircel.
