Govt to sell residual stake in Tata Communications

The government is all set to sell its entire 26.12 per cent stake in Tata Communications, erstwhile Videsh Sanchar Nigam Ltd (VSNL), through offer for sale and strategic sale route in the current fiscal through OFS with the transaction expected to be completed by March 20. VSNL was privatised in the year 2002 by disinvesting 25 per cent shareholding along with transfer of management control to Panatone Finvest, the strategic partner. Subsequent to the strategic disinvestment, the name of the company was changed to Tata Communications. The government intends to disinvest its entire shareholding of 26.12 per cent paid up equity capital of TCL, through Offer for Sale method of shares by promoters through the stock exchanges and thereafter to the strategic partner.

As per the shareholding pattern of Tata Communications, the promoters hold 74.99 per cent in the company. Of this, the government holds 26.12 per cent stake, while Panatone Finvest has 34.80 per cent and Tata Sons, 14.07 per cent. The remaining 25.01 per cent is with the public.

"We understand that OFS will serve two purposes. First, the govt will get around Rs 7,450 cr to Rs 7,500 cr for its equity stake at current price levels with a moderate discount at the current market price," Avinash Gorakshakar, head research, Profit Mart Securities, told Bizz Buzz.

Secondly the stock will get cornered by large funds and inclusion of a strategic partner may rerate the stock after this OFS as the company operates in a niche business segment which is expected to do very well following larger internet growth traffic both in India and overseas, he added.