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Telenor exploring strategic alliance with Tata Teleservices

Thomas K. Thomas
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Norway’s Telenor has sent feelers to Tata Teleservices for a possible strategic alliance, sources close to the development said. The two companies have had initial rounds of discussions and will take a final call after the rules for the upcoming auctions are clear, the sources added.

The two companies are understood to have discussed various options including merging Uninor’s assets with Tata Teleservices. The other option is for Telenor to acquire NTT DoCoMo’s stake in the company partially or fully, depending on the Japanese telecom major’s decision on the upcoming call option.

Strategic partner

Telenor has been scouting for a strategic partner post its falling out with Unitech. Sources said the Norwegian major is also looking at the option of partnering Viom, a joint venture between Tata Teleservices and Srei Infrastructure. Sterlite Industries is also on Telenor’s radar.

NTT DoCoMo, which owns 26 per cent in Tata Teleservices, can increase or sell its stake in Tata Teleservices under a call option agreed between the two parties four years ago. NTT DoCoMo can either take its shareholding from 26 per cent at present to 49 per cent or decide not to exercise the option and sell the entire stake back to Tata, if the company is unable to reach certain performance-related milestones.

According to sources, Tata Teleservices may have missed these milestones, giving the Japanese major reason to exit. The Tata Group owns about 60 per cent in the telecom venture. Singapore-based Temasek and Chennai-based Mr C. Sivasankaran are minority investors, with 7 per cent and 6 per cent stake each.

While Tata Teleservices declined to comment, Telenor said it does not react to speculation. “This is not the first speculation regarding our future course in India that we will, as a policy, decline to comment on. We have always stated that we have a long-term intention in India and expect a fair auction framework that allows us to consider participation,” said Mr Glenn Mandelid, spokesperson for Telenor Group, Asia.

Auction rules

Sources close to Telenor said various permutations and combinations are being explored with multiple players but a final deal can be done only after the dispute with Unitech is amicably resolved. Clarity on spectrum auction policy is also crucial for valuation purposes.

Telenor already has business links with the Tata Group including a global IT services venture with TCS. It has rented all of its towers from Viom, a joint venture between Tata Teleservices and Srei Infrastructure.

tkt@thehindu.co.in

(This article was published on July 4, 2012)
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