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Malaysian group 'plans decoupling Aircel'
29 December 2011
Malaysia’s Binariang GSM intends to decouple Indian venture Aircel to avoid impacts of heavy debts
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Indian mobile operator Aircel will likely be decoupled from its Malaysian parent company Binariang GSM, according to Malaysian ratings firm RAM. The move is aimed at preventing the Indian operator’s heavy debts from impacting other operational units, according to the Economic Times.
RAM said that the decoupling is “expected to be concluded in the next nine months.” The ratings agency said: “Should the restructuring exercise not be completed within the suggested timeframe, the ratings of the sukuk (bonds) will have to be reassessed.”
According to the Economic Times, the shareholding of Aircel is likely to be consolidated under a single entity, instead of ownership under several firms. This will help avoid debt ratings downgrades of other group units as a result of their exposure to the Indian unit and will also allow for an easier sales process if Binariang decides to sell Aircel in the future.
RAM noted that Aircel’s “hefty investments to support network rollout as well as third generation and broadband wireless access spectrum acquisition costs in India” are not expected to generate strong earnings in the near term. This, the agency said, has impacted the Binariang Group’s consolidated balance sheet and debt protection indicators.
Aircel is aware of the restructuring plans, a company official told the Economic Times. The executive added that the restructuring will offer his company more liberty to decide on mergers and acquisitions. The Malaysian holding firm will need some time if it is to restructure assets as it will have to maintain the interest of Saudi Telecom, an indirect shareholder in the Indian operator. GTB
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Aircel plans $3bn 3G investment in India 23 Feb 2011
Aircel selects ZTE and NSN for 3G contract 09 Dec 2010