France Tele set to buy GTL's IT biz

The Rs 300-crore deal will give the French major a foothold in the Indian telecom services space.

France Telecom is in the advanced stage of negotiations to acquire the IT business of Indian telecom infrastructure provider GTL, for a deal valued at around $70 million (around Rs 300 crore).

The deal, expected to be signed by mid-June, would be announced by the end of this month.

According to sources close to the development, France Telecom has completed the due diligence process and was in the final stage of settlement. The French telecom major intends to acquire the company through its subsidiary, Orange Business Services.

Orange Business Services is France Telecom's worldwide umbrella brand for all its communications businesses, including its international IP communication, IT services and mobile businesses.

A GTL spokesperson declined to comment on the development, but added: "We are in advanced stages of negotiations with several players, both national and international, and will announce the winner at the appropriate time."

If France Telecom wins the deal, it would pip global majors, including British Telecom, the US-headquartered EMW and a number of systems integrators (SI), who are also interested in the company.

The French telecom major is interested in the deal as it would provide it with a foothold in the Indian telecom services space.

EMW is a global service solutions provider, systems integrator and turnkey solutions provider with presence in the US, Belgium and China. The UK-based BT is a leading network and telephony solutions provider.

The names of the system integrators could not be ascertained.

GTL had recently decided to hive off its IT business to concentrate on its core business.

The company was also looking at acquiring companies - to be funded from this sell off - in the network services space.

The Indian company's IT business offers enterprise solutions and managed services to medium and large corporates. It has over 250 clients in the IT, ITeS and BFSI segments, and employs around 1000 personnel.

According to analysts tracking the stock, the proposed hive off would be beneficial to GTL and would enhance the returns on the capital employed and earnings per share (EPS).

Recently, GTL had also announced the buyback of its shares of around Rs 285 crore at Rs 300 per share through the tender route.