Taking a bet on India’s rapidly growing mobile phone market, Malaysia’s Maxis Communications has acquired Aircel, one of India’s smaller cellular operators, for $1.08bn.

The Malaysian group and the Chennai-based Reddy family, an Indian joint venture partner, have purchased 100 per cent of the equity in Aircel, whose 2.2m subscribers are located in the southern state of Tamil Nadu.

Maxis will hold a 65 per cent direct equity stake in Aircel, while the Indian joint venture company will own 35 per cent.

Tan Sri Dato Megat Zaharuddin, Maxis chairman, said: “This exciting acquisition, which is also the largest Malaysian investment ever in India, marks another milestone in our aspiration to be a regional communications player of choice.”

He added that while the penetration rate in the Indian mobile market was low at 6.2 per cent, it was among the fastest growing, and the number of subscribers was expected to increase between two to three times from its current 67m.

Maxis becomes the latest player to enter India’s mobile telecoms arena following the government’s decision in October to allow foreign investors to own up to 74 per cent of local companies, up from 49 per cent.

Shortly after the move, Vodafone bought a 10 per cent stake in Bharti Tele-ventures, India’s leading mobile operator, for $1.5bn.

While Aircel is one of India’s smaller operators, it has been setting the stage to expand beyond Tamil Nadu, where it is the biggest.

By the end of 2006, it will have operations in 12 of India’s 26 telecoms circles, giving it access to about 58 per cent of the country’s population.