Batelco buys into S-Tel for $225m
The Indian telecom story is gaining muscle. The latest to join the world’s second largest telecom market is Bahrain’s Batelco, which has signed a deal to buy 49% in Chennai-based S-Tel, a GSM service provider, for $225 million. The Indian telecom company has licenses to operate in six circles in Bihar, Orissa, Jammu & Kashmir, Himachal Pradesh, northeast and Assam. Santosh Robert, director, S-Tel, said the deal will enable his company to partner with an experienced operator for the GSM roll-out which is slated for the middle of this year. GSM or global system for mobile communication is the world’s favourite and cheapest system of communicating through mobile phones. A substantial portion of the Indian telecom operators roll out services through this system. Batelco has partnered with Millennium Private Equity (MPE), a Dubai Financial Services Authority (DFSA)-regulated entity to form Batelco Millennium India Company (BMICL)—a special purpose vehicle to purchase the shares in S-Tel. The transaction would go in for formal approvals and it is expected to become operational upon receiving regulatory approval by the end of April this year. S-Tel was established to gain entry into the rapidly growing mobile markets of northeast and northwest India. The population in these areas is approximately 230 million and mobile penetration rate is less than 20%. “We will focus on delivering innovation and value, and aspires to grow rapidly to respond to the needs of these largely untapped areas,’’ Robert said. Besides, Batelco being a mid-sized operator has a medium appetite for investment found S-Tel very attractive. “They were clear that they did not want to invest in a pan-India operator, instead were looking at a smaller company to invest, which is where we fit in very well,’’ Robert said. S-Tel is a Chennai-based company promoted by Skycity Foundations and Telecom Investments, Mauritius. The company received unified access services licenses (UASL) and start-up spectrum in six category C circles, besides a category A all India internet service provider (ISP) license. Other major telecom deals include NTT DoCo-Mo’s 26% stake buy in Tata Tele for $2.70 billion, Etisalat’s 45% equity purchase in Swan Telecom for $900 million and Telenor’s buy of 60% in Unitech Wireless for $1.23 billion. Batelco is the major telcom player in Bahrain. It is listed on the Bahrain Stock Exchange . In 2008, it posted profits of $269.2 million on a revenue of $777.4m. Batelco was established in 1981 as a Bahraini shareholding company . Despite the full liberalisation, Batelco is still the monopoly operator for fixed, internet and data services in Bahrain. Batelco has presence in Kuwait, Jordan and Egypt .