Tata Group to exit telecom business completely: Sources

Mumbai, January 29: In a big strategic shift at the Tata Group, Cyrus Mistry, a year after taking over as the chairman of the group, has decided to exit the telecom business completely, sources with direct knowledge share that the Tata Group has initiated talks with Vodafone to sell both Tata Communications and Tata Tele. Deal talks are at a “preliminary stage” sources point out.

It will be a deal in various stages as both Tata Tele and Tata Comm have large shareholders with dominance on board decisions. Japanese firm NTT Docomo holds 26% in Tata Tele and has a put option which expires on March 31, 2014. Sources suggest that Docomo may give a one year extension to their put option to pave the way for a deal with Vodafone.

Government of India holds 26% in Tata Communications and as part of the deal negotiations with Vodafone, Tata Group will first buy out government’s stake in the company and then sell to the UK based telecom giant.