A series of conflicts over enterprise valuations and lawsuits have hit the consolidation process

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in the Indian telecom sector. The established players are fighting over their stake worth billions of dollars, while debutants continue to ‘talk’ to a clutch of investors. But a deal looks far away from being finalised as the players indulge themselves in ‘tough bargaining games’.

The current size of Indian telecom industry is pegged at $40 billion, despite having the lowest average revenue per user (ARPU) in the world at $7. India’s telecom sector, which enjoys less than 30 per cent penetration, is the fastest growing in the world.

To add to the woes of the new entrants, the stock markets have hit a tailspin and the investors are taking longer time to make decisions. “The arbitrations happening in the Indian telecom sector are a direct fallout of companies not wanting to let go off their market share as the potential return on their investment in India is still huge. Also, if someone exits, it is very difficult to get an entry back into the Indian telecom scene,” said Jidesh Kumar, managing partner of King Stubb and Kasiva, a New Delhi-based law firm, specialising in telecom and real estate practice.For instance, AT&T earlier had a presence in Idea Cellular, but sold its stake to the then promoters of Idea Cellular — Tatas and Birlas. Now, AT&T wants to get an entry into the Indian telecom sector, but they are finding it extremely difficult as the valuations have vaulted. In fact, AT&T's exploratory talks held with Malaysia's Maxis Communications, which holds a controlling stake in Aircel, forced

C Sivasankaran to move court against Maxis and managed to get a stay on the stake sale to any party by Maxis. The two parties are going to appoint arbitrators to start the arbitration proceedings in Singapore.

"The case is about the indirect stake that Sivasankaran held in the company," said a senior official representing Sivasankaran in the case proceedings. According to him, as per share purchase agreement (SPA) entered into by Maxis and Sivasankaran-contolled Siva Ventures,

the company that held stake in Aircel, Sivasankaran was supposed get 26 per cent of the appreciated value of Aircel upon listing.

"Maxis was supposed to list the company in 3-4 years time," claimed the official.

The deal was signed in 2006. "Even if the company did not go for listing, Sivasanakaran was supposed to get 26 per cent of incremental based on a formula mentioned in the SPA, in case any stake dilution either through a complete sell-out or through private equity placement," added the official.

Maxis is believed to have held exploratory talks for stake sale with AT&T and Etisalat, driving Siva Ventures to initiate legal action.

Maxis was believed to have held talks with potential buyers for selling stake in Aircel, for an enterprise valuation of $6-7 billion, 26 per cent of which stood at $1.5-1.8 billion.