Axiata Said in Talks to Invest in Goldman-Backed Tikona

Axiata Group Bhd. (AXIATA), Malaysia’s largest mobile-phone operator by market value, is in talks to buy a stake in India’s Tikona Digital Networks Ltd., said three people with knowledge of the matter.

Axiata is holding discussions with Mumbai-based Tikona’s owners -- Goldman Sachs Group Inc. (GS), Oak Investment Partners and Everstone Capital Advisors Ltd. -- said two of the people, who declined to be identified because the talks are private. The three firms together control 71 percent of Tikona, according to the Indian company. A deal may value Tikona at about $1 billion, two of the people said.

Investing in Tikona would allow Axiata, which owns a stake in Indian mobile-phone carrier Idea Cellular Ltd., to tap rising demand for data services in the world’s second-largest wireless market. Tikona holds licenses to offer wireless broadband Internet services in regions including Gujarat, Himachal Pradesh and Rajasthan, according to the Department of Telecommunications. A deal may involve Tikona selling new shares to Axiata, one of the people said.

Ownership Rules

Tikona spent more than 10 billion rupees ($195 million) for fourth-generation wireless spectrum, according to the ministry. Reliance Industries Ltd. (RIL), controlled by billionaire Mukesh Ambani, is seeking partnerships for high-speed data services it plans to start this year. Indian ownership rules bar overseas investors from controlling more than 74 percent of an Internet service provider.

Axiata “does not comment on reports speculative in nature,” the company said in an e-mailed statement to Bloomberg. Officials at Tikona, Goldman Sachs, Oakand Everstone declined to comment or didn’t return telephone calls or e-mails from Bloomberg News.

Axiata has a 19.97 percent stake in Idea Cellular Ltd., the mobile-phone company run by Indian billionaire Kumar Mangalam Birla. Axiata increased its stake in Idea by 0.9 percent, according to a statement to stock exchanges in August.

Reliance Industries in June 2010 agreed to pay $1 billion for a 95 percent stake in Infotel Broadband Services Ltd. The deal was announced just hours after Infotel became the only company to buy wireless broadband licenses nationwide.

Tikona plans to start offering 4G services sometime during the fiscal year beginning on April 1, one person with knowledge of the matter said. The company bought HCL Infinet Ltd., a unit of HCL Infosystems Ltd. (HCLI), according to a Nov. 11 stock exchange statement.

To contact the reporters on this story: George Smith Alexander in Mumbai galexander11@bloomberg.net; Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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