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Spectrum price cut puts paid to potential acquisition of Aircel

A potential acquisition of the Indian operator Aircel by Sistema has been shelved following the Russian operator’s decision to reacquire the Indian licences that it held until last year. Sistema’s licences, along with all other Indian 2G licences, were cancelled in February 2012 after the Indian Supreme Court ruled that the issuing process was invalid.

Although the cancelled licences were re-auctioned in November, Sistema chose not to submit a bid for its old spectrum, and instead entered into negotiations with Aircel’s majority owner Maxis regarding a potential acquisition worth as much as $3 billion.

However, this plan has apparently been scrapped – apparently due to an unforeseen outcome of the auctions. There were no bidders for 800MHz CDMA spectrum, with operators claiming that the reserve prices were too high in relation to the value offered by the spectrum. As the frequencies remain unsold, the government has slashed the reserve bid by 50% - a move which has prompted Sistema to take action.

 With the cost of reacquiring spectrum significantly reduced, the firm is now looking at purchasing new licences rather than taking over an established operator as a means of increasing its market presence, with an anonymous source noting that negotiations between the Sistema and Aircel “went cold shortly after the November auction failed.”

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