Tatas not inclined to consider employees’ bid for Tata Teleservices

The over $1 billion management buyout bid of Tata Teleservices Ltd by an employee group backed by private equity fund TPG has reached a dead end as Tata Sons is inclined to pursue a “combination” with group company Tata Communications Ltd.

The employees had put in a bid in early December for the enterprise and fibre businesses that remained with Tata Tele after Tata Sons agreed to sell the mobile business along with spectrum to Airtel in October last year.

“We would like to point out that Tata Sons continues to explore possible combination of its enterprise business with Tata Communications. We believe this is part of the most optimal solution for the Tata group and its stakeholders by finding the right home for our long-standing customers and our employees,” said Tata Sons’ spokesperson Pradipta Bagchi.

The spokesperson, however, did not answer a pointed query as to whether the employees’ bid was considered by the Tata Sons board.

With a view to securing the jobs in the loss-making company, employees of Tata Tele persuaded Mukund Govind Rajan, their former Managing Director (2008-10), to lead, with financial backing from TPG, a possible bid to buy out the Tatas.

Meanwhile, the Centre, which is a 26.12-per-cent shareholder in Tata Communications and has the right to be consulted on major decisions as per the shareholders’ agreement signed with the Tatas, seems to have not made up its mind on whether to support a bid by Tata Communications for Tata Tele’s enterprise business.

A senior official in the Telecom Ministry said that they are “processing” the case and that the ball is now in Minister Manoj Sinha’s court. The Centre will take a “holistic and not a parochial view”, he said.

Asked if Tata Communications has the required financial wherewithal to spend $1 billion to acquire Tata Tele, the official’s cryptic response was: “We have to first see our pocket before we consider spending money.”

COMMENT NOW