If reports are to be believed, then Vodafone is trying to buy controlling stakes in Tata Teleservices; and if this happens, then it will create India’s biggest telecom company!
Vodafone, after it’s sale of 45% in Verizon Wireless for $130 billion, is cash surplus now, and wants to buy stake in some other emerging company. And Tata Teleservices is the right opportunity for them.
Why Tata Teleservices May Say Yes To Vodafone?
Tata owns 59.45% in Tata Teleservices, and the right of first refusal lies with their Japanese partner DoCoMo which owns 25% of the venture. Now, as per certain arrangements between the shareholders, if certain performance parameters are not met and if DoCoMo decides to exit, then Tata has full rights to find a buyer of their shares. The right of first refusal (RoFR) to this deal rests with DoCoMo as well, in case they don’t quit and want to continue.
Vodafone is eyeing this 59.45% controlling stake in the venture. In case there are no buyers, then Tata would be forced to DoCoMo’s share and run the company.
Now, it is not yet certain that this performance trigger has been activated or not, but persons close to the management of Tata Teleservices have given hints that Vodafone may be successful in buying out the controlling stake by March end.
“Discussions are at an early stage. It is difficult at this stage to say what the outcome of these talks will be,” said a person close to this would-be deal.
What if the deal happens?
Persons having knowledge of telecom industry have speculated that if this deals is successful, then Vodafone-Tata will become India’s biggest telecom company with total 248 million subscribers as per November, 2013 count. As of now, Airtel is India’s biggest telecom company with 196 million subscribers.
Competition to Airtel-Reliance?
Last month, Reliance and Airtel had joined hands to create India’s biggest telecom infrastructure company. This new friendship story between Vodafone and Tata Teleservices will surely give stiff competition to Reliance-Airtel merger.
Additionally, Vodafone will look forward to encash Tata’s popular ‘Photon’ brand name to dig deeper into India’s successful Internet growth story. Tata Teleservices is right now providing CDMA based telephony services in 17 circles and GSM based services in 16 circles. Vodafone is bound to get an upper hand due to the merger.
We will keep you updated on this latest development, which may shake the whole Indian telecom industry!
