BackTata Communications slumps 8% as government plans to exit the company
Tata Communications reported a four-fold jump in consolidated net profit to ₹309.15 crore for the quarter ended 31 December against ₹58.54 crore for the same quarter last year.
PremiumMUMBAI : Shares of Tata Communications on Wednesday tumbled as much as 7.96% after the government announced to sell its entire 26.12% stake in the company, erstwhile Videsh Sanchar Nigam (VSNL).
At 03:00 pm, Tata Communications was trading at ₹1059.45 down 6.24% from its previous close, while the benchmark Sensex advanced nearly 1% to 49843.56.
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The government will offload its stake in the ongoing financial year, through offer for sale and strategic sale routes. A part of the shareholding will be offered through OFS and the balance, including any leftover portion in the OFS, will be offered to strategic partner Panatone Finvest. The transaction is to be completed by 20 March 2021, according to a release by Department of Investment and Public Asset Management (DIPAM) made after market hours on Tuesday.
According to DIPAM, for the financial year 2020-21, the government has raised ₹31,733.17 crore as receipts, ₹15,220.14 from disinvestment proceeds and ₹16,513.03 crore received as dividend from state-owned firms and ₹10,992 crore in Bond ETFs against an ambitious target of ₹2.1 trillion. Government is likely to garner ₹4,600 crore from the ongoing IPO of IRFC Ltd and another ₹2,600 crore from the OFS of Steel Authority of India Ltd.
Public sector VSNL was privatised in the year 2002 by disinvesting 25% shareholding along with transfer of management control to the strategic partner, Panatone Finvest. Following the strategic disinvestment, the name of the company was changed to Tata Communications.
The government of India held 26.12% stake while Panatone Finvest held 34.80% stake in Tata Communications (TCL) as on 31 December 2020.
On Tuesday, Tata Communications reported a four-fold jump in consolidated net profit to ₹309.15 crore for the quarter ended 31 December against ₹58.54 crore for the same quarter last year. Net sales fell 0.1% to ₹4,222.83 crore in Q3 FY21 over ₹4228.72 crore in Q3 FY20.
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