The Tatas have raised a total of Rs 741.72 crore by selling various group companies' stake in Tata Teleservices (TTSL), the privately held flagship telecom business of Tata Group. According to the disclosures to the stock exchange, Tata Communications (formerly known as VSNL) has made a partial exit from its investment in has pocketed Rs 424 crore ($83 million) from the deal. In another disclosure on Wednesday by Tata Power, the company has also sold a part of its stake in TTSL to raise Rs 316.72 crore.
Though the company did not give details of the transaction, it is believed to be part of the $2.7 billion deal where Japan’s NTT DoCoMo is picking up 26% in TTSL. It's through partial buyout (6%) of existing shareholders and fresh issue of shares (20%). Tata Communications scrip was up 2.2% in early morning trade after the announcement.
Although the original statement issued by Tata-NTT DoCoMo did not mention which existing shareholder will sell how much (out of 6%), some reports suggest that Tata Sons will be selling 6% to DoCoMo while the Japanese firm will subscribe to additional shares worth 20% of the expanded equity. But it is now clear even other shareholders are participating in the deal.
Tata Sons with 45% is the single largest shareholder of TTSL, followed by Tata Communications which holds 15% in the company. Singapore's sovereign wealth fund Temasek Holdings and Chennai-based investor C Sivasankaran hold 9.9% and around 8% in TTSL respectively. The rest is held by various Tata group companies.
NTT DoCoMo valued the CDMA based telecom firm aggressively at $10.38 billion even ahead of public listed Reliance Communications (the top CDMA player in the country) which has almost double the number of subscribers compared to TTSL. Reliance Communications is currently valued at $6.59 billion, two thirds of TTSL so being a privately held entity worked in favour of TTSL.
After this stake sale and factoring in equity dilution post new issue of shares to NTT DoCoMo, Tata Communications stake in TTSL is expected to come down from 15% to around 11.5%