Sistema is in need of additional airwaves to launch quicker broadband services, an all-India footprint and a big user base. Source: Reuters/Vostock Photo
Russia’s JFSC Sistema is an advanced talks with the Tata Group and Japan’s NTTDoCoMo to buy a major stake in Tata Teleservices, the Economic Times said earlier this week. The negotiations are centered on a deal that would transfer NTTDoCoMo's stake as well as part of the Tata Group's holding to the Russian company, the paper said citing two people familiar with negotiations.
Sistema has appointed Rothschild as its banker, while the Tatas have appointed Standard Chartered Bank, one of the ET’s sources said.
The deal is likely to face a bureaucratic hurdle and won’t be completed until the Indian government announced a new merger and acquisition policy for the telecom sector, the paper said. The regulatory norms at present may require Sistema to either surrender or pay the market price to retain the airwaves held by Tata Teleservices, the paper said. A senior official in the India’s Department of Telecommunications told the paper that a policy is likely to be announced in three months.
“The immediate focus of the company is to efficiently run its 9 circle operations and turn OIBDA (operating earnings before depreciation and amortisation) positive by end of 2014,” Sistema, which operates under the MTS brand in India, told the paper. Tata Group did not immediately comment on the report.
The ET, citing its two sources, said the Tata Group plans to reduce exposure to the telecom sector to a minority stake, giving Sistema a majority stake in the company. No valuations have been decided, the paper said citing the sources.
The Tata Group, this year, surrendered CDMA spectrum beyond 2.5 Mhz in all circles barring Mumbai and Delhi to avoid paying a one-time charge of around $192 million, according to the report. Earlier media reports indicated that Sistema had serious talks with Aircel.
Sistema uses CDMA as its mobile operations technology in the country and the only other companies offering all-India operations are Tata Teleservices and Reliance Communications, the paper said, adding that the Russian company is in need of additional airwaves to launch quicker broadband services, an all-India footprint and a big user base. A takeover of Tata Teleservices would meet these needs.
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