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T.E. Raja Simhan

Chennai, Aug. 22 Sify Technologies Ltd, the Chennai-based and Nasdaq-listed provider of consumer Internet services and enterprise services in India, has deferred the merger of its subsidiary Sify Communications with itself. This decision was taken at a board meeting held on Wednesday.

Sify Communications, which holds National Long Distance and International Long Distance licences, will continue to offer the VPN (virtual private network) and voice services of the company, while Sify Technologies will offer the international and consumer services.

The company’s board approved the merger in February, and it is pending before the High Court of Madras in India for formal approval.

A company official said the decision to defer the merger was taken after the Telecom Regulatory Authority of India recently recommended that restrictions be lifted on Internet telephony in the country. Sify has the required infrastructure to roll out Net telephony in India and the incremental revenues could be 15-20 per cent, the official said.

“Upon reviewing the current environment and the opportunities that may unfold from Government regulation and policies, retaining separate identities for the enterprise and consumer sides of the business will likely benefit the company in terms of licensing, growth and expansion,” the official said.

Areas such as Voice over Internet Protocol in the domestic market being opened up and the new spectrum policy that is to be announced are opportunities that could benefit the company going forward. “We believe the company will be better positioned to seize opportunities given the current regulatory policy landscape by deferring the merger,” he said.

The withdrawal of the merger also means that the capital infusion from the Indian investor of the transferor company, will not be required, and therefore dropped. Both entities will fund the capital expenditure from cash available with the company, internal accruals and other means as and when required, Sify said in a statement.

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