Tata Teleservices and Siestma are reportedly in advance stages of a deal that will transfer NTT Domoco holdings along with a part of the Tata Group’s shares to Sistema. Though the valuation of the deal has yet not been decided, it is expected that Siestma will be the major stake holder in the new venture. Also Read - Vodafone, Reliance, MTS, Idea to roll out full MNP from today
For this merger deal, the companies have reportedly appointed Rothschild bank for Sistema and Standard Chartered Bank for the Tata Group. Though the transaction in the deal will only happen once the new acquisition terms and policy is officially announced. The deal is expected to be officially announced in three months.
It is believed to be due to the merger and acquisition norms in India that the deal between the two companies is being pushed ahead. For this deal to be finalized, Siestma’s Indian operations (MTS India) will have to either surrender or pay the market price to get hold of the airwaves otherwise held by Tata Tele for Docomo operations.
MTS India has been quoted saying that “The immediate focus of the company is to efficiently run its 9 circle operations and turn OIBDA (operating earnings before depreciation and amortisation) positive by end of 2014.” Moreover, the Tata Group has been working on shrinking their stake in telecom sector. Thus, it is believed that MTS would be the major stake holder in the company.
NTT Docomo held 26 percent stake in the company and was expecting to achieve a huge turnover over the years. However, it is due to the loss and debt on the venture between NTT Docomo and Tata, that the company has now considered opting for this merger agreement with Siestma. Moreover, Tata Group is believed to have stop funding for the telecom venture, which has resulted in the shuting down of operations in three circles and partial closure in another five. In fact, the company has also been in an intra-circle roaming agreements with Aircel to enhance its network by using the latter’s infrastructure.