Vodafone may not buy Tata’s CDMA biz

Interested in Tata Docomo, Tata Communications and Neotel

vodafone-officeThough there are unconfirmed reports that Vodafone might buy out Tata Group’s entire telecom business, its highly unlikely that it would buy the latter’s CDMA telecom unit.

A highly placed source from one of the two companies in question said that Vodafone is not interested in buying Tata Teleservices’ CDMA arm.

“Though Tata’s are pressing for this, Vodafone has so far shown reluctance only,” said the source without going on record.

“Vodafone has very limited presence in CDMA and that is one major factor its not interested in buying the CDMA business here,” he added.

There are market speculations that Tata Group might exit the telecom business completely and the firm is in active discussions with Vodafone to sell out Tata Teleservices and Tata Communications.

According to the same source Vodafone is interested in buying out Tata Communications, its subsidiary in South Africa – Neotel and Tata Docomo.

As recent as in the last week of March Tata Communications had told TeleAnalysis that discussions between Vodafone and Neotel has reached its final stages, and the deal would happen in two months time.

“The commercial negotiation is on and the deal will happen in 2 months time,” Tata Communication’s CFO Sanjay Baweja told TeleAnalysis on March 24.

He also had said that the company is in exclusive discussions with Vodafone for the sale out of its South African subsidiary Neotel.

Earlier in March the Government of India had given its consent to Tata Communications for the sale out. It is to be noted that Indian government holds 26% stake in Tata Communications and that is why government’s nod is mandatory if Tatas want to exit its South African business.

Its been reported many a times in the past that Tatas are desperate to exit the telecom business as the conglomerate’s telecom business is reeling under heavy debt, of around Rs 23,000 crore. It was till the last fiscal that ended March 31, 2013. This year’s debt value is not yet known.

There is also some kind of uncertainty with regards to its future relationship with NTT Docomo, Japan’s largest telecom firm. NTT had, in 2007, taken 26% stake in Tata Teleservices for $2.6 billion but it is believed that the Japanese firm is not too buoyant about a long term partnership with Tatas anymore. It has the option to exit the JV in April this year.

“The commercials of the deal is also a big issue as the value that NTT is expecting might not turn up to the value that Vodafone is ready to pay,” the source added.

It is rumored that NTT Docomo is expecting more than $ 3 billion for its 26% stake in Tata Teleservices.

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