BackTech Mahindra slips 4.3% as AT&T sells 7% stake
Tech Mahindra slips 4.3% as AT&T sells 7% stake
PremiumNo impact: Tech Mahindra’s Vineet Nayyar. Bharath Sai / Mint
Mumbai: The shares of Pune-based Tech Mahindra Ltd slipped 4.34% on the Bombay Stock Exchange on Wednesday as one of its largest clients, AT&T Inc., sold its 7% stake to exit from the software services firm.
US telecom company AT&T is believed to have earned about $170 million (Rs758.2 crore) by selling its entire 8.07% holding in the firm, which it acquired in March. About 1% was sold earlier in bits, according to an investment banker with knowledge of the deal, who did not want to be identified.
AT&T is Tech Mahindra’s second largest client—after British telecom firm BT Group Plc.
AT&T also published a statement on its website saying it plans “to continue to work with Tech Mahindra".
In March, AT&T had exercised options to pick up 9.9 million shares, or an 8.07% holding, in Tech Mahindra. The options were offered to SBC Communications Inc.—as AT&T was earlier known—in 2005 as part of a technology outsourcing contract that SBC had given to Tech Mahindra.
AT&T sold 4.3 million shares at Rs762.39 a piece on BSE and the same number of shares at Rs762.44 per share on the National Stock Exchange (NSE), according to bulk deals data available on the websites of the two exchanges. Life Insurance Corp. of India picked up 3.76 million shares on the BSE and another 3.6 million shares on NSE at Rs762 each.
“With AT&T exiting from Tech Mahindra, AT&T is now free to consider the Indian IT services vendor at par with any other competing vendor," said Ankur Rudra, IT research analyst at Execution Noble, the UK-based investment bank.
“While it is definitely not a positive development, it is yet unclear if the sale has any strategic motives," said another analyst with a foreign brokerage on condition of anonymity.
Tech Mahindra’s promoters, at the end of December, included Mahindra and Mahindra Ltd, which held a 43.99% stake, and British telecom company BT Group, which had a 30.86% stake.
Tech Mahindra shares lost 4.34% to closed at Rs770 on BSE. The exchange’s sectoral index for IT stocks fell 1.55% to close at 5,326 points. The benchmark Sensex index closed at 17,380, shedding 1.76%.
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