Mysian tycoon's $7 billion wipeout turns his India dream into nightmare


NEW DELHI: It was supposed to be the crowning achievement of Mysian tycoon T Ananda Krishnan's five-decade career.



But his $7 billion bet on mobile carrier Aircel + Ltd may instead go down as one of the biggest-ever flops by a foreign investor in India, a stark reminder that doing business in the world's fastest-growing major economy is often a lot tougher than it looks.


Krishnan's holding company stands to lose all the money it poured into Aircel over the past 12 years, people with knowledge of the matter said, after the carrier filed to start bankruptcy proceedings this week. Buffeted by intense competition and regulatory uncertainty, Aircel is the latest in a long list of casualties in an Indian telecom market that only a few years ago was luring foreign entrants in droves.


While international companies have fared much better in India's buoyant consumer products and financial services industries, the turmoil in telecom is unlikely to help Prime Minister Narendra Modi's campaign to lure more foreign capital. In January, his go nment eased restrictions on foreign direct investment in several sectors, including single brand retail, real estate brokerages and power exchanges.


"India has always been a difficult market, even as it offers the prospects of great demographics and a billion-plus population," Sampath Reddy, chief investment officer at Pune-based Bajaj Allianz Life Insurance Co, said by phone. "The Aircel episode definitely has lessons in the offing for anyone who starts a business in the country."


Krishnan, 79, spent about $800 million to purchase Aircel in 2006, when less than 10 percent of India's 1.1 billion people owned a mobile phone and the scope for growth looked nearly limitless.


By that time, the Harvard Business School graduate had already established himself as one of Mysia's most powerful billionaires, with controlling stakes in the country's biggest mobile-phone and pay-television operators and close ties to former Prime Minister Mahathir Mohd.


India Allure


Faced with lackluster growth at home, Krishnan saw India's booming market as key to his empire's future. And he was willing to invest big to make Aircel a success.


Over the years, Mas Communications Bhd, the holding company in which Krishnan owns a 45 percent stake, made about $3.4 billion of shareholder advances to Aircel, one of the people with knowledge of the matter said. Mas Communications also bought $1.2 billion of common stock and subscribed to $1.6 billion of redeemable preference shares, the person said.


While he had deep pockets, Krishnan failed to anticipate how cutthroat India's telecom market would become. With nearly a dozen players jockeying for market share, call rates in the country plunged to some of the lowest levels worldwide. Competition has only intensified since 2016, when Reliance Jio Infocomm Ltd., owned by India's richest man, stormed into the market and offered free calls.


Aircel made a last-ditch effort to gain scale by attempting a merger with Reliance Communications Ltd. A setback came in January 2017, when India's highest court barred Aircel from selling or leasing its airwaves amid a broader graft lawsuit. The deal eventually col psed in October last year.


After Aircel, Krishnan is likely to spend more time focusing on his other businesses, which include Mysian carrier Mas Bhd. and pay-TV operator Astro Mysia Holdings Bhd, the person with knowledge of the matter said. Both companies are still profitable, though their stock prices have dropped by an average 10 percent over the past year, versus a 9.6 percent gain in Mysia's benchmark equity index, according to data compiled by Bloomberg.


That doesn't mean Krishnan is giving up on India entirely. He still controls a stake in South Asia FM Ltd, a radio broadcaster, and TV service provider Sun Direct. The businesses are performing well, and Krishnan currently has no plans to sell, the person said.



译文来源:三泰虎 http://www.santaihu.com/44343.html

Dilip Thorat


 Dilip Thorat-Mumbai, Maharashtra-1 day ago

He took help of wrong scamgress to enter India. Result was obvious.



Sohail Choudhary


 Sohail Choudhary-1 day ago

By allowing JIO to Practice UnFair Trade Practices the GOI has Dest yed the Indian Telecom Market...





 Rohan-india-1 day ago

"Ease of doing Business" is the exclusive privilege of Gujju Business men and not Foreign Investors ! This is the GujaRat model of Modi !



Gstmd Kc


 Gstmd Kc-1 day ago

Only gujarati cartel will rule this country. JIO will start looting consumers after finishing all telcos.



Govind Sarda


 Govind Sarda-1 day ago

Krishnan forgot to understand that Indian po iticians can change rules to favor any person , He should have learnt the art greasing of hands before entering India



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