Chennai-based Siva Group, trying to sell its 4 per cent stake in loss-making Tata Teleservices, could not find any taker among private equities or other investors.
Siva Group had mandated JM Financial to hunt for a buyer, but investors shied away from the Indian telecom industry due to lack of regulatory clarity and the ongoing 2G scam case.
The group was hoping to sell the Tata Tele stake to raise funds so it could buy back Bahrain Telecom's stake in its now-closed wireless telephony business, S Tel, which lost its licence following a supreme court ruling in February. Siva Group had agreed to buy back Bahrain Telecom's stake in a year.
However, as the Siva Group defaulted in its commitment, it is now facing a $185-million legal suit in a London court filed by Bahrain Telecom.
Tata Tele along with listed Tata Tele Maharashtra serves around 100 million customers across India with a unified brand name - Tata Docomo. It recently acquired spectrum in the Delhi circle.
"There are no takers for the stake and the group will have to wait if Docomo increases its stake in Tata Teleservices or any other investor comes in," said a banking source close to the development.
When contacted by email, the Siva Group did not comment on the issue.
The Siva Group was holding close to 8 per cent stake in unlisted Tata Teleservices since 2006. It sold part of the stake to Docomo when the Japanese telecom major entered the Indian market in 2008 by buying 26 per cent stake in Tata Teleservices.
Although Docomo had the option to up its stake in Tata Teleservices by March this year, it did not exercise the right and is waiting for more clarity in the telecom policy.
In October 2011, the Siva Group had offered to purchase the Bahrain Tele's stake in S Tel and sought a year's time to consummate the transaction.
One year's time was to look for an alternate investor or, if everything goes well, Siva Group itself was to buy back Bahrain Telecom's stake in S Tel. But the group lost its licences and was unable to raise funds to buy back Bahrain Tele's stake.
On November 7, Bahrain Telecom said that it has filed a claim in UK High Court of Justice, Commercial Court against Siva Ltd and its promoter C Sivasankaran, for failing to adhere to the settlement agreement.
According to a company source, Siva Group is considering all legal options in India after Bahrain Telecom sued it in the London courts. The source added that as Bahrain Tele still holds stake in the Indian company, it cannot move foreign courts on any dispute.
"We are looking at all our legal options and take steps accordingly in India," said the source.
Who is Sivasankaran?
Chinnakannan Sivasankaran, 56, chairman of Siva Ventures, made his mark by starting new businesses in the IT and telecom industry and selling them for handsome profits. The group set up wireless telephony companies Aircel and (later) S Tel in India.
Siva, as associates call him, keeps a low profile, but made headlines last year when he complained to CBI that former telecom and textiles minister Dayanidhi Maran forced him to sell his Aircel to Maxis of Malaysia for a quid pro quo. The case is pending.