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

Bloomberg
March 2, 2018

New Delhi, Mar 2: It was supposed to be the crowning achievement of Malaysian 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 government 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 Malaysia'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 Mohamad.

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, Maxis 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. Maxis 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 collapsed in October last year.

The company summed up its dire situation in a Twitter post on Wednesday announcing the bankruptcy filing, saying Aircel had been "facing troubled times in a highly financially stressed industry, owing to intense competition following the disruptive entry of a new player, legal and regulatory challenges, high level of unsustainable debt and increased losses."

A representative for Maxis Communications declined to comment.

After Aircel, Krishnan is likely to spend more time focusing on his other businesses, which include Malaysian carrier Maxis Bhd. and pay-TV operator Astro Malaysia 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 Malaysia’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.

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News Network
February 9,2020

New Delhi, Feb 9: Calling India a "long-standing friend", Sri Lankan Prime Minister Mahinda Rajapaksa on Saturday thanked Prime Minister Narendra Modi for visiting his country in the aftermath of last year's Easter Sunday terror attacks and outlined that New Delhi has always helped Colombo in its fight against terrorism.

In a joint press briefing with PM Modi, Mahinda Rajapaksa said he hopes that India will continue to help Sri Lanka fight terrorism.

Mahinda Rajapaksa expressed his gratitude to PM Modi for the neighbourhood first policy and the priority India gives to Sri Lanka.

"We had agreed that our cooperation is multifaceted and priority is given to a number of areas including security, economy, culture and social sectors. Part of our discussions centered on cooperation with regard to the security of the two countries. India has always assisted Sri Lanka to enhance our capacity, capabilities in intelligence and counter-terrorism. We look forward to getting continued support in this regard," he said.

"I thank the Prime Minister for visiting Sri Lanka in the aftermath of the Easter Sunday terror attacks that provided us with immense strength to come to terms with the tragedy. We also appreciate Prime Minister Modi's $400 million line of credit to enhance the economy of Sri Lanka and another $50 million line of credit for fighting terrorism," he added.

The Sri Lankan president urged PM Modi to consider further assistance to expand housing projectS all over Sri Lanka to benefit people from rural areas.

"The Prime Minister and I discussed how Sri Lanka and India can work together in the field of economy. India is among the world's fastest growing economies. I discussed with PM Modi how Sri Lanka could benefit from certain economic sectors where India is in a strong position," he said.

Concluding his statement, Mahinda Rajapaksa said, "India is our closest neighbour and a long-standing friend. The close historical links...provided a solid foundation to our ties."

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News Network
March 10,2020

New Delhi, Mar 10: Minutes after Jyotiraditya Scindia submitted his resignation to the party membership to Congress chief Sonia Gandhi, the Congress expelled him for anti-party activities after reports emerged that he had met PM Modi and Amit Shah.

Disgruntled Congress leader Jyotiraditya Scindia met Prime Minister Narendra Modi on Tuesday amid indications that he might join hands with the BJP to topple the Madhya Pradesh government.

Sources said Scindia first met Union Home Minister Amit Shah, and then the two leaders met Modi at the prime minister's residence.

Legislators loyal to Scindia, who has been upset with the Congress leadership with his marginalisation in the affairs of the Madhya Pradesh Congress, are likely to quit the party to reduce the Kamal Nath-led government to a minority.

It is likely to be followed by the Bharatiya Janata Party staking claim to form the government in the state.

The Congress President has approved the expulsion of Jyotiraditya Scindia from the Indian National Congress with immediate effect for "anti-party activities," said KC Venugopal, General Secretary Congress.

No person is, nor will be greater than the party: Congress youth wing chief

Indian Youth Congress (IYC) chief Srinivas B V on Tuesday slammed Jyotiraditya Scindia, who has announced his resignation from the primary membership of the Congress, and thanked party chief Sonia Gandhi for expelling the former Guna MP "who was promoting anti-party activities and factionalism".

"The history of 1857 and 1967 was once again repeated," Srinivas B V said, referring to the 1857 Revolt against East India Company and the role of the Scindia royals back then as well as Vijayaraje Scindia's switch from the Congress to the Jana Sangh in 1967.

"I would like to thank Congress president Sonia Gandhiji for taking the strong steps to expel the leader who was promoting anti-party activities and factionalism," the IYC chief said.

"No person is, nor will be greater than the party," he added.

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News Network
May 8,2020

May 8: Thousands of migrants have been stranded “all over the world” where they face a heightened risk of COVID-19 infection, the head of the UN migration agency International Organization for Migration (IOM) has said.

IOM Director-General António Vitorino said that more onerous health-related travel restrictions might discriminate disproportionately against migrant workers in future.

“Health is the new wealth,” Vitorino said, citing proposals by some countries to introduce the so-called immunity passports and use mobile phone apps designed to prevent the spread of the new coronavirus.

“In lots of countries in the world, we already have a system of screening checks to identify the health of migrants, above all malaria, tuberculosis… HIV-AIDS, and now I believe that there will be increased demands in health controls for regular migrants,” he said on Thursday.

Travel restrictions to try to limit the spread of the pandemic has left people on the move more vulnerable than ever and unable to work to support themselves, Vitorino told journalists via videoconference.

“There are thousands of stranded migrants all over the world.

 “In South-East Asia, in East Africa, in Latin America, because of the closing of the borders and with the travel restrictions, lots of migrants who were on the move; some of them wanted to return precisely because of the pandemic,” he said.

They are blocked, some in large groups, some in small, in the border areas, in very difficult conditions without access to minimal care, especially health screening, Vitorino said.

“We have been asking the governments to allow the humanitarian workers and the health workers to have access to (them),” he said.

Turning to Venezuelan migrants, who are believed to number around five million amidst a worsening economic crisis in the country, the IOM chief said “thousands… have lost their jobs in countries like Ecuador and Colombia and are returning back to Venezuela in large crowds without any health screening and being quarantined when they go back”.

In a statement, the IOM highlighted the plight of migrants left stranded in the desert in west, central and eastern Africa, either after having been deported without the due process, or abandoned by the smugglers.

The IOM’s immediate priorities for migrants include ensuring that they have access to healthcare and other basic social welfare assistance in their host country.

Among the UN agency’s other immediate concerns is preventing the spread of new coronavirus infection in more than 1,100 camps that it manages across the world.

They include the Cox’s Bazar complex in Bangladesh, home to around one million mainly ethnic Rohingya from Myanmar, the majority having fled persecution.

So far, no cases of infection have been reported there, the IOM chief said, adding that preventative measures have been communicated to the hundreds of thousands of camp residents, while medical capacity has been boosted.

Beyond the immediate health threat of COVID-19 infection, migrants also face growing stigmatization from which they need protection, Vitorino said.

Allowing hate speech and xenophobic narratives to thrive unchallenged also threatens to undermine the public health response to COVID-19, he said, before noting that migrant workers make up a significant percentage of the health sector in many developed countries including the UK, the US and Switzerland.

Populist narratives targeting migrants as carriers of disease could also destabilise national security through social upheaval and countries’ post-COVID economic recovery by removing critical workers in agriculture and service industries, he said.

Remittances have already seen a 30 per cent drop during the pandemic, Vitorino said, citing the World Bank data, meaning that some USD 20 billion has not been sent home to families in countries where up to 15 per cent of their gross domestic product comes from pay packets earned abroad.

Vitorino, in a plea, urged to give the health of migrants as much attention as that of the host populations in all countries.

“It is quite clear that health is the new wealth and that health concerns will be introduced in the mobility systems - not just for migration - but as a whole; where travelling for business or professional reasons, health will be the new gamechanger in town.

“If the current pandemic leads to a two or even three-tier mobility system, then we will have to try to solve the problem – the problem of the pandemic - but at the same time we have created a new problem of deepening the inequalities,” he said.

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