Swan set to acquire Allianz’s mobile licences owned by Ashish Deora

AFTER offloading a 45% stake to UAE’s Etisalat for $900 million, Swan Telecom is set to acquire the mobile licences held by Allianz Infratech . The deal, which may run into a couple of hundred crores, is likely to be announced within a fortnight, according to sources close to the development. Allianz had applied for telecom licences on a pan-India level but was given permission to launch services in only two circles — Madhya Pradesh & Bihar. Swan, which has bagged licences to operate in 13 of the 22 telecom zones in India, is not present in these two circles. Allianz Infratech is promoted by four individuals — aviation entrepreneur Ajay Singh, Ashish Singh, Praveen Singh and Ashish Deora, who hold 25% stake in the company each. Following the deal, Swan will be able to provide telecom services in 15 circles covering over a billion people. Swan managing director Shahid Balwa denied the development. He, however, admitted that Swan would make an acquisition to extend its footprint in India, while refusing to divulge further details. After the Etisalat deal, Mr Balwa had told ET that Swan would launch mobile services in the first quarter of 2009, adding that the company was in talks with existing operators and standalone tower companies for infrastructure sharing. Swan is one of the seven companies that were successful in winning GSM licences earlier this year, the others being Datacom, Loop Telecom , S Tel, Shyam Telecom, Unitech and Allianz. Swan is owned by the Mumbai-based Dynamix Balwas Group of companies. Industry sources said that Etisalat will raise its stake in Swan to 51% or more at a later stage. Indian regulations permit foreign telcos to have upto 74% stake in any company that offers communication services in India. After the deal, Allianz would be the first of the new entrants to sell out. It’s not clear under the current merger and acquisition norms in telecom whether a new player like Allianz can sell out. Early this year, Allianz Infratech failed to make the cut to bag a pan-India telecom licence as its net worth was lower than the mandated Rs 1,350 crore. It was later awarded licences for only two circles. While the company paid about Rs 30 crore as entry fee for these two circles, the value of these licences would be multiples of that amount. For instance, Swan paid about Rs 1,400 crore for its licences in 13 circles earlier this year. The company is now worth $2 billion or Rs 8800 crore, based on the valuation in the Etisalat deal.