Tata Tele may sell 10% stake for $350 mn

Talks on with Temasek.

Tata Teleservices Ltd (TTSL), the CDMA services provider of the Tata group, is in talks with a clutch of investors to sell nearly 10 per cent stake.

The stake sale could fetch around $350 million (around Rs 1,575 crore) to the promoters. At this price, the valuation of the company could be around Rs 15,750 crore.

Though Tata executives declined to comment, sources close to the development said a handful of investors, including the Singapore government-owned private equity fund Temasek, had shown interest in acquiring the stake.

Preliminary talks were already over and the matter was now being handled directly by Tata Sons, the sources said. TTSL is an unlisted company and is promoted by various Tata group companies, including Tata Sons, Videsh Sanchar Nigam Ltd (VSNL) and certain other Tata companies.

South Korean Telecom (SKT) had made an abortive attempt to pick up one-third stake in the company but the acquisition did not materialise due to differences over valuation.

Also, the TTSL promoters were not keen on selling 33 per cent to one player as this could lead to differences in decision-making and expansion plans. Valuation was the other reason for the deal.

TTSL had over 7.1 million subscribers in November 2005 and had operations in 20 circles. With 1 million subscriptions from its "Non-Stop Mobile" scheme in just 45 days, Tata Teleservices has increased its market share in the mobile wireless space to 4.5 per cent in November from a minuscule 1.5 per cent a year ago.

The company expects to have 10 million subscribers by March 2006 and at least 20 million by FY07. The company will roll out its network in 2,500 cities within three months from now.

The company is also planning to launch at least eight low-cost models next year. TTSL had earlier acquired Hughes Tele.com India (HTIL) and had renamed it as Tata Teleservices (Maharashtra).

Apart from offering CDMA-based fixedline and wireless services, the company is also into pay telephone booth (PTB) market.