Temasek buys 9.9% stake in Tata Tele

Deal size estimated to be close to Rs 2,000cr.

Tata Teleservices Ltd (TTSL), the telephone services arm of the Tata Group, has offloaded a 9.9 per cent stake to the Singapore government's investment arm, Temasek Holdings Pte, for an undisclosed amount.

The deal size is estimated to be close to Rs 2,000 crore, putting the valuation of the unlisted Tata company at Rs 20,000 crore. But Tata Tele executives refused to either confirm or deny this.

TTSL is also in talks with a clutch of investors, including former Aircel owner C Sivasankaran, for further stake sales. Temasek purchased the stake through its fully owned subsidiary, Aranda Investments (Mauritius) Pte, the companies said in a joint statement.

"TTSL is issuing 9.9 per cent of its equity to global investment major Temasek Holdings. We intend to use the proceeds for our expansion and ongoing operations, especially to build a technologically driven and consumer-focused company," its CEO Darryl Green told Business Standard.

"An investment from a foreign equity investor underlines the industry's confidence in the company," he added.

Post conclusion of the deal, Temasek will have a member on TTSL's board. Tata Sons, the promoter, will continue to remain as the major stakeholder in TTSL. Two other Tata companies, VSNL and Tata Industries, hold stakes in the company.

This investment gives Temasek an entry to the growing cellular phone market in India. The number of mobile users are expected to quadruple to 300 million by the 2009, according to Gartner Inc, a global advisory farm.

An unlisted company, TTSL operates in 2,200 towns across 20 circles like Andhra Pradesh, Chennai, Gujarat, Karnataka and New Delhi among others, and has a customer base of over 8.4 million.