The owner of the the fibre business has received multiple proposals, according to one of the people. The management consortium could face competition from Tata Communications Ltd., which said in December it’s considering buying the enterprise business and fixed line assets of Tata Teleservices.
Data usage is booming in India after billionaire Mukesh Ambani’s telecom unit stormed into the market with free offers for mobile Internet browsing. The fibre business of debt-laden Tata Teleservices includes an optical transmission network spanning 113,000 kilometers (70,000 miles) in the country, providing long distance as well as intra-city connectivity, according to its annual report.
Deliberations on the potential sale of the fibre business are at an early stage, and other bidders could still emerge, the people said. Representatives for TPG, Tata Teleservices and Tata Group’s holding company, formally known as Tata Sons Ltd, declined to comment. A representative for Tata Communications said the company doesn’t have any comment beyond previous statements.
Shares of Tata Teleservices Maharastra Ltd, the listed arm of closely held Tata Teleservices, jumped as much as 5.4 per cent before closing 2.9 per cent higher on Thursday in Mumbai trading, while the benchmark S&P BSE Sensex fell 0.3 per cent.
The management buyout offer — the first of sorts for the Tata Group — will help the parent repay debt at the ailing telecom unit. It may also set a precedent as Tata Sons Chairman Natarajan Chandrasekaran looks to exit sub-scale, unprofitable businesses in an effort to streamline the conglomerate.
A deal would mark the second round of asset sales for the wireless operator after it announced the divestment of its mobile-phone business in October to India’s Bharti Airtel Ltd. in what was termed a cash-free transaction.
The mobile-phone business has been a long-running headache for the $103 billion conglomerate. The unit was the subject of a years-long dispute between Tata Sons and former Japanese partner NTT Docomo Inc until it was settled in February. That feud contributed to the differences that led to the founding family’s scion Ratan Tata ousting Cyrus Mistry as group chairman in 2016.