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HindustanTimes Thu,18 Sep 2014

Third try? S Africa’s MTN in talks to buy Tata’s telecom arms

M Rajendran, Hindustan Times  New Delhi, July 30, 2014
First Published: 23:05 IST(30/7/2014) | Last Updated: 02:36 IST(31/7/2014)

South Africa’s largest telecom operator, MTN, is looking to foray into the Indian market again, this time by acquiring Tata Teleservices (TTSL) and Tata Maharashtra Ltd (TML), sources with knowledge of the discussion said.

“It is too early to comment on the level of discussions, since only preliminary talks have been held,” they added.

RPG Enterprises chairman Harsh Goenka had created a buzz on Tuesday when he said on Twitter: “MTN doing due diligence of a large Mumbai-based telecom company. Will this mega deal happen?”

MTN has been looking to enter India for over 5 years. In 2009, it broke off talks with Bharti Airtel. Last year, it had walked away from a discussion with Anil Ambani-controlled Reliance Communications.

Industry buzz mentioned RCom, Tata Teleservices and Aircel as buyout targets, but analysts said Tata Teleservices, which recently lost its foreign investor, Japan’s NTT DoCoMo, is likely to fit the bill.

“MTN had held discussions with RCom, too, early this year. We are not aware of status of the discussion… however with Tata Group, two rounds of preliminary discussion were held recently,” a corporate lawyer, who had advised Tata during the DoCoMo stake sale, said.

When contacted, a Tata Sons spokesperson said, “We do not comment on such speculation.”

“MTN continues to look for value-enhancing opportunities, including merger and acquisition, as part of its long-term growth strategy. However, we don’t comment on market speculation,” Paul Norman, chief HR and corporate affairs officer, said in an emailed response to HT. 

The Tata Group has been looking to sell off its telecom ventures. Discussions with Vodafone broke down early this year following differences over valuations. “Any deal for TTSL sell off will take at least 24 months even if both parties agree due to regulatory and unresolved issues in TTSL and TTML’s assets,” an investment banker working with the analyst firm advising Tata on M&As said.

While there is an unresolved issue on the sale of estimated 700 acres of land asset in TML’s case, in TTSL, the Tata Group wants to value its spectrum for both CDMA and GSM, while MTN or any other buyer would be willing to pay for only a unified licence.

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