C SIVASANKARAN ACQUIRES A 51% STAKE IN CHENNAI-BASED TELECOM FIRM S TEL

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MAVERICK investor C Sivasankaran has re-entered the Indian fledging telecom industry by acquiring a 51% stake in Chennai-based telecom firm S Tel, three-and-a-half years after it pulled out of Aircel. The deal size is estimated to be around Rs 1,150 crore, said a person close to the development.

Sivasankaran’s investment arm, Sterling Infotech Group (SIG), has bought the stake in S Tel from two private equity firms —Skycity Foundations and Telecom Investments. S Saravana, Mr Sivasankaran’s 22-year-old son, has joined the S Tel board, post-transaction.

The other 49% in S Tel is held by Bahrain Telecom (Batelco) which bought the stake recently for Rs 1,100 crore. Batelco has operations in seven markets across the Middle East, North Africa and Asia. The telco reported revenues of $891 million and a profit of $276 million in 2008.

When contacted, a senior S Tel official said: “We would make an announcement relating to the deal in about a fortnight.” S Tel’s website makes a mention of two promoters — Batelco Millennium India Company Limited (BMICL) and SIG. Emails sent to SIG and S Tel remained unanswered.

Siva, as he is popularly known, was barred from buying more than a 10% stake in any Indian telecom company for three years as part of a non-compete clause he had signed with the Maxis when he sold his stake in Aircel to the Malaysian company $ 1.08 billion in 2005. The three year period came to an end in March this year. Sources close to the development said Siva finalised the deal early this week. SIG, the Singapore based company has a turnover of over $3 billion.

Mr Sivasankaran is known for selling business at peak valuations. Apart from the sellout of Aircel to Maxis, he sold Dishnet DSL to Tata Communications in 2004. Today, he holds around a 8% stake in Tata Group company, Tata Teleservices which was acquired for Rs 1,200 crore in 2006. Earlier last month, he bought a majority stake in a DLF-Akruti SPV for for Rs 310 crore.

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