MTNL scraps Suntel bid once and for all

18 May 2009

Mahanagar Telephone Nigam Ltd (MTNL) has pulled out of a planned bid for a controlling stake in Sri Lankan wireless in the local loop (WiLL) operator Suntel, citing legal issues and high liabilities, reports India’s Business Standard. The Indian state-run telco was looking at acquiring a 50% stake for around USD180 million, but in January 2009 it was revealed that it had ‘suspended indefinitely’ its plan, after emerging as the preferred bidder the previous year. ‘We have decided not to go ahead with our plans to acquire Suntel, as there are a lot of issues. We have also intimated our decision to that company’s officials,’ MTNL Chairman and Managing Director RSP Sinha told Business Standard. MTNL Director of Finance Anita Soni added: ‘The company [Suntel] has a lot of uncertainties, including several court cases and financial liabilities. We were not sure which way the company was going, and being a public sector unit (PSU), we could not afford to run into legal issues… It was not a viable option and we decided to withdraw our acquisition plans,’ she said, adding that the company would look at other opportunities as they arise. Swedish-based TeliaSonera indirectly owns a 55% stake in Suntel, with the rest shared by Sri Lanka’s Metrocorp, National Development Bank of Sri Lanka, Townsend of Hong Kong and International Finance Corporation.