South Asia Blog: Aircel Limited: One of the top GSM service providers in India

Aircel Limited is a mid-sized Indian mobile phone company that operates on GSM network. Earlier, Aircel Limited used to operate in eleven circles including Assam, Bihar, Chennai, Himachal Pradesh, Jammu & Kashmir, North East, Orissa, Tamil Nadu, West Bengal, Kolkata. Later, Indian telecom ministry allowed it to expand its business in 13 other circles. They are: Delhi (Metro), Mumbai (Metro), Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra & Goa, Rajasthan, Punjab, UP (West) and UP (East). Aircel Limited also provides International Long Distance (ILD) call services and National Long Distance (NLD) telephony services.

Aircel Business Solutions (ABS):

Aircel Business Solutions (ABS) is an ISO 9000 certified company it provides various services such as, multi-protocol label switching, virtual private networks, voice over internet protocol, and managed video services on wireless platform. ABS is also a registered member of WiMAX forum.

Background:

Previously, Aircel Limited was named Srinivas Cellcom Limited. It was a subsidiary of Aircel Televentures Ltd. (later renamed Siva Ventures Limited), which was the subsidiary of Sterling Infotech Limited., owned by NRI businessman, C Sivasankaran. Aircel Televentures Ltd. comprised of Aircel Limited that provides mobile service to Tamil Nadu excluding Chennai, Aircel Cellular Ltd., the mobile service provider for Chennai and Dishnet Wireless Ltd., the mobile service provider in the northern and eastern parts of India. Aircel Cellular Ltd. was the second largest mobile phone operator in Chennai.

Earlier, in February 2005, Indian government increased the stake limit for foreign investors from 49% to 74%. At that time, Aircel Televentures was approached by a Russian Telecom giant, AFK Sistema. It wanted to buy 49% stake of Aircel Televentures Ltd. for $450 million. Among other companies who were interested to buy Aircel stakes were Hutch, Bharti and Idea Cellular. A deal was made between Hutch and Aircel in June 2004 to buy Aircel for Rs. 12 billion but it did not receive the approval of the Department of Telecommunications (DoT).

Later that year, Maxis Communications Berhad, the largest Malaysian mobile phone operator, decided to buy out Aircel in order to expand its business in the emerging market. The deal was finalized in 2006 and Aircel was sold jointly to Maxis and the Reddy family, owner of the Apollo Hospitals Ltd., the largest Indian health care chain for $1.08 billion. Maxis spent $800 million for the deal. It holds 74% stake in the company. The Reddy family controls the rest under Indian law which requires a minimum 26% stake for local owners in phone companies.

Network:

Currently, Aircel is the seventh largest GSM service provider in India with more than 16 million subscribers. It is also one of the fastest growing mobile companies in India. By the end of 2009, Aircel wants to become a national operator. In 2006,

Alvarion Ltd., one of the leading WiMAX technology providers, announced that Aircel has been working with the company to use BreezeMAX 3300 in order to deploy WiMAX networks in 50 cities in Eastern and Northern India. BreezeMAX is the award winning WiMAX certified platform. It is designed according to the IEEE 802.16 standards. It uses OFDM technology for advanced non-line-of-sight (NLOS) functionality. In 2007, the Department of Telecom (DOT) allowed mobile phone operators to test 3G Network in selected cities. At that time, Aircel tested its 3G network in Chennai, along with ZTE Corporation. Aircel was given permission to test 3G network in five cities including Coimbatore, Chennai, Bhubaneshwar, Shillong, and Guwahati. However, in order to support 3G, Aircel would have to upgrade its existing infrastructure.

Trivia:

So far, Aircel Limited is the largest investment by Maxis in India. To acquire, Aircel Ltd, Aircel Cellular Ltd and Dishnet Wireless Ltd., Maxis and Apollo jointly spent Rs.48.6 billion.

In order to spread its business in Kolkata, Aircel invested Rs. 5 billion by 2008. It has further plans to invest another Rs. 10 billion over the next few years.

In the first one and half year of its operation, Aircel became the top mobile phone operator in Tamil Nadu. Even today, Aircel has remained the largest mobile operator in the region of Tamil Nadu excluding Chennai.

In December 2003, Sterling Infotech, the then owner of Aircel Limited, bought RPG Cellular Services Ltd., the mobile business arm of the RPG Group. Few months ago, Sterling Infotech bought out Vodafone PLC’s 20.76% stake in RPG Cellular Services Ltd. for $8 million. This was followed by 100% take over by Infotech in exchange of Rs. 2.5 billion. RPG Cellular Services, which has been operating in Chennai, were one of the two original licensed mobile operators in the region and one of the top mobile operators in the region. After buying up the company, Aircel became the top mobile operator in Chennai.

Aircel started its expansion in 2005 toward Eastern part of the country. It experienced immense success in Assam and North Eastern provinces in the first eighteen months of its business.

In 2008, Aircel Limited revealed its plans to invest $4-5 billion over the next three years to expand its business all over India.

In February 2009, Aircel announced to launch GSM services in Kerala. The company announced to invest Rs. 5 billion in the next couple of years in Kerala.