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Tata Tele scouts for partner

Arijit De, Reeba Zachariah in Mumbai | March 01, 2004 08:48 IST

The Tata group is scouting for a strategic partner to part-fund the expansion of its telecommunications arm Tata Teleservices.

Talks are on with several foreign companies for picking up a part of the Tata group's stake in Tata Teleservices, which provides code division multiple access services. However, a final decision on the partner and the stake to be offloaded will take time.

Preliminary discussions are understood to be under way with leading Asian companies like NTT DoCoMo and KDDI of Japan, Verizon of the US, KTF and SKT of Korea and China Unicom.

But sources in the know said it was too early to zero in on the partner. A Tata group executive said China Unicom was not a frontrunner.

The Tatas are likely to offload up to a 26 per cent stake in Tata Teleservices, but could be open to selling more depending on the offer.

Confirming the development, a Tata group executive said, "The reason for seeking a strategic partner is money." The Tata group is investing over $2 billion in its telecom business.

"Now that the regulatory framework is stable and the market is defining itself, the Tatas will not be averse to discussing strategic partnerships in telecommunications," said a Tata group spokesperson.

Tata Teleservices has over 800,000 subscribers across the country for its CDMA-based mobile services. It operates in six circles and has bought licences for 11 more. The company has paid around Rs 450 crore (Rs 4.5 billion) for a unified licence.

Tata Power is the largest shareholder in Tata Teleservices with a 35 per cent stake, followed by Tata Sons (24 per cent) and Tata Industries (over 17 per cent).

Videsh Sanchar Nigam Ltd, in which the Tatas hold a 46 per cent stake, holds 20 per cent in Tata Teleservices. This is likely to increase to 26 per cent over time.

The Tata group holds over 30 per cent in Idea Cellular, which provides GSM-based telecom services. But Tata group chairman Ratan Tata told Business Standard in a recent interview that the group's "real play in telecom was Tata Teleservices". "Ultimately our growth is in the CDMA space," he had said.

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