The race to induct a strategic partner in Tata Teleservices (TTSL) seems to have narrowed down to Japan’s NTT DoCoMo and European telecom giant France Telecom. The Tata Group is close to diluting its stake for around Rs 5,000 crore in the country’s sixth-largest telecom operator, industry sources told ET .
“Talks are in the final stage and a deal is expected to be announced in the next two months,” informed sources said. One industry source with knowledge of the matter said NTT DoCoMo might be the front-runner. This, however, could not be independently confirmed. Both companies have put in bids. It’s not clear when a formal announcement would be made.
It is also not clear as to the exact stake which the partner will pick up. The figure of Rs 5,000 crore assumes a stake sale in the region of 12%. However, a number of industry sources following the transaction said the bids were for a 26% holding, involving a pay-out (for the investor) of around Rs 10,000 crore. When contacted, a TTSL spokesperson said: “We are in discussions with several players for off-loading a minority stake in our company and cannot comment any further on speculative queries.” Talks for a stake sale have been on for over six months now. Others who had been earlier eyeing a piece in the company with around 28 million subscribers included UAE’s Etisalat, Mexican billionaire Carlos Slim-controlled TelCel and Russian telecom major Altimo. While France Telecom is not new to the Indian telecom landscape, it will be the maiden entry for NTT DoCoMo if it manages to clinch the deal.
In December 2006, DoCoMo had inked an agreement with Hutchison Essar (now Vodafone Essar) for its I-mode services, which include online games, videos and access to content. However, this pact was subsequently cancelled due to regulatory changes.
On the other hand, France Telecom was a 26% partner in BPL Mobile before it sold off the stake to a consortium of investors in January 2005. Subsequently, to enter the world’s fastest-growing telecom market, it finalised a joint venture with Moser Baer to offer long-distance services last year. It also acquired the IT services division of GTL last year and a stake in TTSL, if that were to happen, is expected to complete its India telecom story.
It is possible that Chennai-based tycoon C Sivasankaran, who owns 8% in TTSL, may divest a part of his stake to the new investor. However, most of the fund infusion would take place by way of issue of new shares. An unrelated transaction, which is possibly the sale of a 49% stake in TTSL’s tower business, is also in the works. That deal, which may close in a few months, is likely to fetch around Rs 10,000 crore.
TTSL will use the money for expansion in the CDMA and the soon-to-be-launched GSM services. While TTSL is set to roll out CDMA services in Jammu & Kashmir, Assam and North-East circles, it has also received start-up GSM spectrum in Tamil Nadu, including Chennai, and Orissa. It requires funds to launch operations as well as for branding and marketing exercises. TTSL MD Anil Sardana has already announced a capex of $2 billion for the GSM rollout.
Singapore-headquartered Temasek and Mr Sivasankaran currently hold 9.9% and around 8% respectively in TTSL. Mr Sivasankaran bought his TTSL stake for Rs 1,200 crore from Tata Sons in March 2006 while Temasek paid around Rs 1,500 crore for its equity.
Source: Economic Times