Mukund Rajan-led group offers at least $1 billion for Tata Tele assets

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Mumbai: A set of Tata group executives, led by its head of international operations Mukund Rajan, has placed a bid for Tata Teleservices Ltd’s enterprise business, in what will potentially be a management buyout.

Rajan and some of the top executives of Tata Teleservices are being backed by a consortium led by TPG Capital and a large sovereign pension fund in their bid for the assets of the telecom company, which include 125,000 route km of fibre network, a person with direct knowledge of the matter said.

If the consortium wins the bid, Rajan will move out of the Tata group to manage the business, the person said requesting anonymity.

A Tata Sons spokesperson said: “We decline to comment on speculation.” TPG Capital, too, declined comment.

Bloomberg on Thursday first reported that a management consortium backed by TPG Capital has bid for the fibre telecommunications network controlled by Tata group.

The suitors offered at least $1 billion for the fibre assets and related businesses owned by Tata Teleservices, Bloomberg said.

“(The consortium has) offered much more than $1 billion… If the deal happens, it would be the largest deal in the space,” the person added.

It would also mark the first such management buyout in the group, which is in the process of shedding money-losing businesses.

Mint learns that the consortium led by Rajan made the offer to Tata Sons “a few weeks ago”.

The TPG Capital-backed consortium will join other suitors in the fray for Tata Teleservices’s fibre assets. Tata group’s own telecom company Tata Communications Ltd, which in December expressed its desire to buy the enterprise business and fixed line assets of Tata Teleservices, is also in the race to buy the assets.

An eventual deal would mark the second round of asset sales for the stricken wireless operator after it announced the sale of its mobile-phone business in October last year to Bharti Airtel Ltd in what was termed a cash-free transaction.

A tariff war sparked by Reliance Jio Infocomm Ltd has fast-tracked consolidation in the telecom sector.

In the ensuing bloodbath, Vodafone India Ltd and Idea Cellular Ltd announced a merger which is still in the works while market leader Airtel acquired the assets of Telenor India and Tikona Digital, along with the consumer mobile business of the Tata group.

Reliance Jio, in turn, emerged as the highest bidder for a majority of the wireless assets of Reliance Communications Ltd in a deal that would give the Mukesh Ambani-controlled telecom operator access to valuable 4G spectrum and help his younger brother Anil repay lenders.

The consolidation in the industry over the last year-and-a-half has led to job losses running “into several thousands”, the person cited above said.

Now Rajan, along with some of his senior colleagues, have come together to buy the fibre assets which would help salvage jobs which were hanging in the balance at Tata Teleservices, the person said.

Rajan has experience running the business, having previously served as managing director of Tata Teleservices. In addition, he has also worked closely with some private equity firms.

“The idea is to secure all the jobs,” said the person cited above. If the consortium wins the deal, added the person, “the current management will be retained, which is why it has been put together”, the person said.

“It is up to the group (Tatas) to decide what they want to do,” the person added.livemint