New Delhi: The Tata group will look at the option of acquiring shares of its publicly-listed unit, Videsh Sanchar Nigam Ltd (VSNL), India’s biggest long-distance telecom company, through market purchases after it found terms of an option to buy a 26% stake held by the Union government harsh, chairman Ratan Tata said.
“The terms of the option and the formal valuation led us to believe that there would be no great advantage in exercising the option at this point in time,” the 69-year-old industrialist told reporters at an industry event. “And, the golden share the government still retains gives them tremendous veto power.”
Asked if the goverment’s golden share would be an impediment to VSNL’s plans, Tata said, “It could be because there could be divergence of objectives. So, as of now, whatever we acquire we will acquire through market acquisitions.”
The Tatas currently own 50.11% of VSNL. The group did not exercise an option on Monday to buy the government’s 26.12% stake in the long-distance and broadband access provider. The remaining shares are held by public shareholders. VSNL shares moved up Rs11.5 or 2.76% to Rs428.25 on the Bombay Stock Exchange .
New Delhi is still to make up its mind on selling its residual stake in companies such as VSNL. After giving buyers call options on the residual stake at the time of the initial sale, the government sought legal opinion on these options. Last month, the Centre also created an empowered group of ministers to look into the issue.
The Tatas acquired a 25% stake in VSNL from the government on 13 February 2002 and subsequently made an open offer for an additional 20% stake.