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Max India may dump 25% stake in Max Telecom

This dilution of stake will be inclusive of the approximately 10 per cent that AIG Indian Sectoral and Infrastructure Fund is set to pick up in MTVL shortly.

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Sources close to Hutchison Max Telecom Limited, the company operating cellular services in Bombay, claim that "Bhai Analjit Singh (chairman Hutchison Max) is scouting for a buyer... the dilution of stake will amount to at least 25 per cent of Max India's stake in MTVL."

The sources did not rule out a further divestment of stake amounting to 49 per cent. Max India currently holds 100 per cent of MTVL, which in turn holds a 51 per cent stake in HMTL and another 51 per cent in Comsat Max India, a provider of VSAT services.

A 25 per cent divestment by Max India in MTVL will reduce the former's stake in HMTL and Comsat Max proportionately to 37.5 per cent.

The intended divestment of 25 per cent in MTVL by Max India, sources say, is part of an internal restructuring that is being carried out.

Max India is in the process of identifying its core areas of competence, and telecom is apparently not one for the group.

Telecom industry sources are of the view that the dilution of stake by Max India is the only way for the Indian partner to bring in funds.

The HMTL cellular venture is characterised by one strong partner - the Hong Kong-based Hutchison Whampoa - and a relatively weak one in Max India, sources said.

MTVL is now in the process of raising Rs 2 billion through a combination of equity and debt while HMTL is on the lookout for Rs 3 billion in debt.

Financial projections made by HMTL show equity for the venture moving up from Rs 796 million in 1995-96 to Rs 4.5 billion in 2000-2001.

For 1997-98, HMTL's equity has been pegged at Rs 3.75 billion with loans at Rs 3.58 billion. According to sources, the company at present has an equity base of about Rs 2 billion.

Max India, the 51 per cent holder in HMTL, through MTVL, has to bring in at least Rs 750 million in fresh equity in 1997-98 on an incremental basis to meet its projections.

Max India's group vice-president, finance, Vivek Jetley, has refused to divulge financial details of HMTL. He has declined to comment on the issue of a stake reduction in MTVL by Max India.

Jetley, however, emphasised that "Max India has met all its commitments to HMTL".

Max India also claimed that it will park Rs 1 billion worth of its equity holding in MTVL with AIG and will raise another Rs 1 billion in debt through deep discount compulsorily convertible debentures (zero-coupon instruments) with a face value of Rs 235 each.

- Compiled from the Indian media

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