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Government will sell the residual 26.12% stake in Tata Communications Ltd (TCL) to exit the erstwhile Videsh Sanchar Nigam Ltd, partly through offer for sale in the stock market and selling the rest to the Tatas to garner around 8000 crore as part of its disinvestment receipts in the current financial year ending 31 March.

“Part of the stake will be sold through OFS and on the discovered price, rest of the stake will be sold to the Tatas. Though how much exactly will be sold through OFS has not been decided yet, the Cabinet Committee on Economic Affairs (CCEA) has approved selling up to 16% stake through OFS and remaining to the Tatas," a finance ministry official said on condition of anonymity.

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DIPAM has invited bids from merchant bankers-cum-selling brokers and has set 3 February as the last date for bid submission while bids will be opened on 4 February. The transaction is to be completed by 20 March.

VSNL, a Central Public Sector Enterprise was privatized in 2002 by divesting 25% shareholding along with transfer of management control to Panatone Finvest Limited, the Strategic Partner (SP), Subsequent to the strategic disinvestment, the name of the Company was changed to Tata Communications Limited (TCL).

“The SP (Tatas) had given an open offer at the time of strategic disinvestment in 2002; the present transaction including transfer of shares to the promoters namely the SP, is to be structured in a manner that it does not trigger open offer again. The appointed MB (merchant banker) would advise the government in this regard and also on any exemption from SEBI is required in the matter," DIPAM said in the bid document.

The consolidated profit after tax of TCL in the December quarter rose 4.28% from a year earlier to 309 crore, driven by robust growth in profitability and revenue from the data business, the company said on Tuesday. TCL posted a consolidated operating profit or Ebitda of 1046 crore during the quarter, up 37.5% from a year ago, on the back of margin expansion in data business and cost optimization initiatives. Covid has driven data consumption as millions continue to log in from their homes for work, education and entertainment. The share price of the company has increased by 5.5% over one year period of time.

So far this year, the government has garnered 15,220 crore through minority stake sales and initial share sales of Mazagon Dock Shipbuilders Ltd against an ambitious target of 2.1 trillion. With most of the large ticket strategic disinvestments such as BPCL and Air India pushed to next fiscal due to the delay caused by the coronavirus pandemic, government is unlikely to meet its asset sales target for the second consecutive year. In FY20 also, government missed the 1.05 trillion disinvestment target by 40,000 crore. 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.

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