Thursday, July 12, 2012

Maxis selling India operations - a little note

Based on this headline, we have seen sometimes how difficult it is to expand overseas (beyond Malaysia). This is not the first time Ananda's stable had difficulties in moving beyond Malaysia for its telecommunication ventures. Astro had a tough time penetrating Indonesia as well few years ago.

However, when we read of some companies in exploring overseas ventures, we get excited with those stocks without thinking of the potential challenges. Imagine FGVH saying they are going to use the listing and money raised from IPO to go Africa. Try to think of this headline. Some see it positively, but if we are to do some critical thinking - I will say let's wait and see. Even IHH claiming that they are moving forward to open its first private hospital in Shanghai, China is a case to be deliberated. China is attractive for healthcare and so is India for telecommunication. IHH should go and explore China but this headline does not give me any excitement until they report back success.

One of the few Malaysian (born) tycoons which had made it overseas until the stage where his operations overseas dwarfed Malaysian operations is Robert Kuok. See Wilmar - if I am not mistaken, his total acreage of plantation land in Indonesia is bigger than Malaysia. I can foresee that it is not easy. And of course he has made it very well in selling edible oil in China. Shangri-La as well.

Another person potentially could have had success overseas - Tony Fernandez via Airasia. This is not necessarily because Tony is special, but Airasia is special. Many Asian countries want that kind of operations. Airasia is almost a franchise. I did write on Indonesia wants some help from Airasia if the officials from that country is level headed. Why? They have bad publicities for their airlines, and for a country such as Indonesia they want better connectivity. Not many privately owned airlines can expand so fast in such a short timeframe. Airasia can and have proven to have done it.

I am not saying that we should not invest into companies that have overseas operations, however sometimes it is good to evaluate how potentially successful it can be as treading unchartered waters for Malaysians may be a different ballgame. Some businessmen are very successful but some had different challenges.

It does not mean Ananda does not have success overseas before. His Bumi Armada's business does see some success.
From ZD Net

Report: Maxis looks to exit India

Maxis Berhad is looking to sell its stake in Indian telco Aircel, with Russia's Sistema touted to be an interested party. This development comes amid regulatory uncertainty regarding the 2G spectrum auction slated for later this year and the ongoing probe into the sale of Aircel to Maxis, one report states. The Times of India reported on Tuesday that Maxis had held preliminary discussions with bankers representing Sistema, although talks have yet progressed to a "serious" stage of negotiations when the prospective buyer requests to conduct due diligence of Aircel's accounts.

Citing an executive close to Maxis with direct knowledge of the discussions, the Indian news agency stated: "Maxis sees itself as a long-term player in India, but will listen to offers in the wake of regulatory and policy uncertainty. Bankers have brought many potential permutations and combinations for mergers and strategic alliances, including that of Sistema, to the company."

The source said Maxis was upset with the way the Indian government's investigations into the sale of Aircel had dragged the Malaysian telco's founder Ananda Krishnan and other top officials into the probe.
The country's Central Bureau of Investigation (CBI) had alleged that "undue favors" were given following the sale, when then-telecommunications minister Dayanidhi Maran was said to receive 328 million ringgit (US$107 million) for getting Aircel's owner C. Sivasankaran to sell 74 percent stake in Aircel to Maxis.
A Sistema spokesperson, however, said the company was not in talks with Aircel. "Sistema Shyam Teleservices believes that the talk of engaging with other telecom service providers for a possible acquisition deal is motivated," the spokesperson stated in the report.

Despite exploring avenues for exit, the unnamed source added that Maxis will continue to invest in Aircel and recently lined up new leaders for the Indian telco. This is because given the uncertain regulatory landscape and depressed valuations for telcos, it would be difficult to strike a deal now. Times of India stated that Maxis Group CEO and Aircel Director Sandip Das declined to comment.

Analysts had stated earlier that the lack of urgency within India's government to resolve the allocation of 2G spectrum by fixing an auction date and reserve pricing is a blow to its credibility and will hamper the development of the local telecommunications industry.


Anonymous said...

Thx for d sharing. I plan to buy REIT, do u think it is ok? Thx again.

Unknown said...

I think REIT is more property play. If you understand or good at property industry, then you are better off at evaluating REIT. There are so many types of REIT - commercial, residential, retail, hotel etc.

It depends on the supply and demand of the properties at the point of time.

REIT will provide you more consistent income as compared to stocks as 90% of their income are supposed to be paid as dividends if I am not mistaken.