Vodafone’s bid to buy Tata Tele hits roadblock

Tata Group and Vodafone Plc are bargaining hard to settle a major telecom deal that involves Vodafone India picking up controlling stake in Tata Teleservices.

Tata Group and Vodafone Plc are bargaining hard to settle a major telecom deal that involves Vodafone India picking up controlling stake in Tata Teleservices.

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The process that began early last month stalled last week over two issues — the future of 26% stake held by the government in Tata Communications and a demand for reducing staff in the company.

Source directly involved in the ongoing discussions on the issue between the two companies said, “We have been hit by a sort of iceberg, don’t know if the 26% stake held by government will capsize the negotiations or still allow it to float.”

Last week, a high-level team of executives from Vodafone and Tata Group failed to arrive at an agreement on ways to manage the 26% stake held by the government in Tata Communications.

Sources involved in the negotiations said, “TTSL has refused to buy back the government stake unless the valuation is increased and has also refused to reduce its staff strength.”

TTSL has about 8,000 employees and Vodafone has asked this strength to be cut to half.

TTSL and Vodafone spokespersons refused to comment on the issue.

The NDA government led by Prime Minister Atal Bihari Vajpayee had ensured the de-merged land following sale of VSNL in 2002 to Tata Group will be transferred to a new company Hemisphere Properties India (HPIL) and the bidder who acquired a stake in VSNL (the Tata Group) was barred from purchasing shares in HPIL owning the land.