Tata Management, TPG Bid $1 Billion for Fiber Assets

Updated on
  • Consortium led by Tata Sons’ international head Mukund Rajan
  • Bidding group offered to buy assets from 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.

Photographer: Sanjit Das/Bloomberg

A management consortium backed by TPG Capital has bid for a fiber telecommunications network controlled by India’s Tata Group, people with knowledge of the matter said.

The suitors offered at least $1 billion for fiber assets and related businesses owned by the Indian conglomerate’s Tata Teleservices Ltd. unit, according to the people, who asked not to be identified because the information is private. The consortium is led by Mukund Rajan, the head of international operations for Tata Group’s holding company, they said. 

Some Tata Teleservices employees and another international fund have also joined the bidding group, the people said. Any deal will add to the $19.5 billion of private equity transactions targeting India companies that were announced last year, data compiled by Bloomberg show.

Tata Teleservices has received multiple proposals for the fiber network, 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 fiber 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.

Streamlining Efforts

Deliberations on a potential sale of the fiber business are at an early stage, and other suitors 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 Maharashtra Ltd., the listed arm of closely held Tata Teleservices, jumped as much as 5.4 percent in Mumbai trading Thursday before closing 2.9 percent higher. The benchmark S&P BSE Sensex fell 0.3 percent.

The management buyout offer -- a first for Tata Group -- would help the ailing telecom unit repay debt. It may also set a precedent as Tata Sons Chairman Natarajan Chandrasekaran looks to exit smaller, unprofitable businesses in an effort to streamline the conglomerate.

A deal would mark the second round of asset sales for Tata Teleservices, 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.

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