Malaysia’s Maxis has denied violating India’s foreign investment law, despite having a majority stake in the JV that controls 35% of Aircel.
Indian law prevents foreign ownership of more than 74% of a mobile operator, with the remaining stake meant to be held by foreign operators.
But investigations by India's Economic Times have shown that Maxis owns 97% shares in Deccan Digital Networks, the Malaysian firm’s JV with Sindya Securities & Investments.
Deccan Digital owns a 35% stake in Aircel, while Maxis holds a direct 65% stake.
Both Maxis and Sindya Securities & Investments head Suneeta Reddy have, however, denied any wrongdoing to the paper, arguing the arrangement was compliant with the law.
Sindya had been named a local partner when Maxis bought Aircel in 2006 for $800 million, and subsequent filings with Malaysia’s stock exchange showed Maxis declaring a 99.3% economic interest in Aircel, compared to its direct and indirect 74% equity state.
Through 2008, Reddy was the sole representative on the Deccan Digital board, while Maxis had two, including CEO Sandip Das.
India’s CBI is investigating the issue, compared alongside other probes into the industry.
In a separate case, Thailand’s True had filed a complaint against rival DTAC, accusing the latter of breaking foreign ownership laws.