Tata Sons subsidiary to buy 43.3% stake in Tejas Networks for Rs 1,850 cr

Tejas Networks said Panatone and some other companies of the Tata Group would make a public announcement to acquire up to 40.3 million equity shares of Tejas Networks

After acquiring online grocery retailer BigBasket in May and online pharma products seller 1mg Technologies in June, Tata Group continues its acquisition spree, with Tata Sons announcing on Thursday its subsidiary Panatone will buy 43.3 per cent in digital telecom infrastructure firm Tejas Networks for Rs 1,850 crore.

Panatone is Tata Sons’ investment arm and the promoter entity of Tata Communications.

In a statement, Tejas Networks said Panatone and other certain companies of Tata Group would make a public announcement to acquire up to 40.3 million equity shares of Tejas Networks, representing 26 per cent of the voting capital, in accordance with the Sebi Takeover Regulations.

Tejas Networks shares on the BSE closed 5 per cent up at Rs 246 a share, thus giving it a market valuation of Rs 2,300 crore.

“Tejas Networks sees a very large opportunity in the telecom sector both in India and global markets with the new cycle of investment in 5G and fibre-based broadband roll-outs. Tejas Networks will utilise the proceeds raised from the preferential allotment to invest organically and inorganically in research & development, sales and marketing, people, and infrastructure and to enhance its manufacturing and operational capabilities to cater to this large market opportunity, and for other general corporate purpose,” Tejas Networks said in a statement.

Sanjay Nayak, chief executive officer and managing director, Tejas Networks, said: “Tejas Networks was started with a vision of creating a top-tier global telecom equipment company from India. The association with Tata Group will accelerate the realisation of this vision and enable us to address the large market opportunity available to us to build a financially strong global company, backed by a trusted brand. I am fully committed to making this a success and am excited about the next phase of our journey.”

Nayak will continue in his present position with the existing management team.

Analysts said Tejas sold telecom networks equipment used by telecom operators. They are switches and routers, among others. Tejas is also a vendor for Tata Communications and supplies equipment to others.

“There will not be any merger with Tata Communications as Tejas’s other customers may not be interested in sharing knowledge and outlook with their competitor (Tata Communications),” said an industry analyst. 

Tata Sons recently signed an agreement with Bharti Airtel for developing software for 5G deployment.

“We see the Tatas are building a telecom networking business with an open stack platform. Tejas, therefore, fits into the Tatas’ ambition to cash in on opportunities in the 5G segment,” said the analyst.