Tata has another go at buying Suntel

5 Oct 2010

Indian telco Tata Communications has entered formal talks to purchase 100% of Sri Lankan wireless in the local loop (WiLL) telephony provider Suntel, via its wholly owned unit Tata Communications Lanka, with a view to providing local data and telephony services and augmenting its existing range of international voice and data services offered to mainly corporate Sri Lankan customers. Tata’s USD90 million bid for Suntel in 2007 was trumped the following year by an offer of around USD180 million from fellow Indian firm Mahanagar Telephone Nigam Ltd (MTNL), although the latter gave up on the proposed takeover in May 2009 because of ‘legal issues and high liabilities’ surrounding the target company. According to Indian newspaper The Economic Times, an unnamed person familiar with the deal said that the purchase price is expected to be lower this time, as the Sri Lankan company has not met growth forecasts in the last two years. TeleGeography’s GlobalComms Database says that CDMA-based fixed line operator Suntel provides voice, data and internet services for business and residential clients, including WiMAX broadband access, and also operates an Ethernet-based data network covering 221 towns and cities, and provides a range of internet/data services for large and small enterprise customers. Its focus on business and data services is aimed at offsetting stagnation in its fixed-wireless telephony subscriber base in the last couple of years. Stockholm-based Overseas Telecom, an associated company of Sweden’s TeliaSonera, holds a 55% stake in Suntel. TeliaSonera has a 65% equity share and 42% of voting shares in Overseas Telecom. Suntel’s remaining shares are split between Sri Lanka’s Metrocorp, the National Development Bank of Sri Lanka, Townsend Ltd of Hong Kong and the International Finance Corporation (IFC, a member of the World Bank Group). The database also notes that Tata (formerly VSNL) has offered international voice and data services in Sri Lanka under its external gateway operator (EGO) licence since February 2004.

Sri Lanka, Suntel (now part of Dialog), Tata Communications