N. Chandrasekaran, chairman of Tata Sons. Aniruddha Chowdhury/Mint
N. Chandrasekaran, chairman of Tata Sons. Aniruddha Chowdhury/Mint

Telecom dept to examine proposal for sale of Tata Teleservices’ enterprise business

N. Chandrasekaran today met telecom secretary to discuss the closure of Tata Teleservices' consumer mobile business by sale to Airtel, as well as Tata Communications' plan to acquire the enterprise business

New Delhi: Tata Communications Ltd plans to acquire the enterprise business of Tata Teleservices Ltd and has sought the approval of the Department of Telecommunications (DoT) for the transaction, a person aware of the development said.

“They have sought approval. The government is evaluating the proposal currently. May be we will be able to take a call (for the acquisition) in 10-15 days," the person cited above said, requesting anonymity. The government owns a 26.12% stake in Tata Communications, earlier known as Videsh Sanchar Nigam Ltd (VSNL).

Tata Sons chairman N. Chandrasekaran on Tuesday met telecom secretary Aruna Sundararajan to discuss the closure of Tata Teleservices’ consumer mobile business by sale to Bharti Airtel, as well as Tata Communications’ plan to acquire the enterprise business of Tata Teleservices, said the person cited above.

In October 2017, the Tata group said it would sell the consumer mobile businesses of Tata Teleservices and Tata Teleservices (Maharashtra) Ltd on a debt-free cash-free basis to Bharti Airtel Ltd. The proposed transaction includes transfer of customers and assets of Tata consumer mobile businesses to Airtel, including 178.5 MHz spectrum (of which 71.3 MHz is liberalized) in the 850 MHz, 1,800 MHz and 2,100 MHz bands.

The acquisition is pending multiple regulatory approvals, including those from National Company Law Tribunal, Competition Commission of India and the DoT.

At that time, Tata Teleservices had also said it was “in initial stages of exploring combination of its enterprise business with Tata Communications" and that any such transaction would be subject to respective boards and other requisite approvals.

When asked if a final decision had been taken on Tata Communications buying the enterprise business of Tata Teleservices, Chandrasekaran told reporters the Tata Communications board had to approve it first. On when the board planned to take it up, he said: “For us, the first thing is, we have to close the mobile business."

Tata Communications plans to announce March quarter results on 10 May. Apart from the government’s 26.12% stake, Tata Communications’ other promoters are Panatone Finvest Ltd with 30.12% stake, Tata Sons Ltd with 14.07% stake and Tata Power Co. Ltd with 4.71% stake. The public holds the remaining 25.01% stake.

An email query sent to Tata Communications was not answered till press time.

VSNL was disinvested on 13 February 2002 and management control of the firm was passed on to Panatone Finvest, a special purpose vehicle under the Tata group.

At the time of disinvestment, surplus land measuring 773.13 acres located at five locations across Pune, Kolkata, New Delhi and Chennai was demarcated and it was decided that the surplus land will not be part of the disinvestment bid. Panatone had undertaken an obligation to demerge or hive off the surplus land into a realty company Hemisphere Properties India Ltd.

Meanwhile, in order to facilitate the demerger of surplus land from Tata Communications to HPIL, the Cabinet on 4 April, ending an almost 15-year wait, approved the transfer of administrative control of HPIL from the DoT to the Ministry of Housing and Urban Affairs after infusion of equity of Rs700 crore and Rs51 crore secured government loan into the company, and implementation of the scheme of arrangement for de-merger of surplus land.