Koor Offers $720M for Tata Stake
In a filing with the Tel Aviv Stock Exchange on Thursday, Koor says it sent a "non-binding indicative letter of intent" to Tata Teleservices on April 14, offering "an investment of between NIS2 and NIS2.5 billion for the acquisition of a significant portion of minority rights" in the carrier.
Koor Industries has holdings in Telrad Networks Ltd. , ECtel Ltd. (Nasdaq: ECTX), and Dekolink Wireless along with interests in agrochemicals and venture capital. The company is 55 percent owned by IDB Group, which also owns Cellcom Israel Ltd. , Israel's largest mobile operator.
Since talks are in a "preliminary" stage, the statement notes "the parties have not yet reached an understanding as to the amount of the investment or the percentage of the holding," but reports peg it at around 10 percent.
Just the day before, Tata Teleservices spokeswoman Suroor Hussain was cited by Bloomberg as denying reports that the carrier is planning to sell off between 15 percent and 30 percent to raise around $1 billion to help finance its network expansion.
Tata Teleservices operates a CDMA network in 20 of India's 23 telecom circles, or service areas, and was recently allocated spectrum to launch operations in the remaining three. (See Shyam, Tata Score CDMA Spectrum.) The carrier has also been given permission by the government to build a GSM network, and earlier this week it was granted start-up GSM spectrum in the combined Tamil Nadu and Chennai circles. (See India Begins Allocating GSM Spectrum .)
According to reports in The Economic Times and other local media, Tata has appointed Lazard Capital to handle the sale to private equity and other strategic investors. Israeli incumbent operator Bezeq, The Israel Telecommunications Corp. Ltd. (OTC: BZQIF) is also said to be among the potential buyers. Tata Teleservices sold a 9.9 percent stake to Singapore-based investment firm Temasek back in 2006.
Based on the $575.1 million to $719.76 million range being offered by Koor for a 10 percent share, Tata could raise well over $1 billion if it did sell 30 percent.
Shares in Tata Teleservices Maharashtra Ltd., the carrier's publicly traded subsidiary operating in the Maharashtra circle, climbed 14.58 percent on the Bombay Stock Exchange on Thursday to close at 33.80 Indian Rupees. The market was closed Friday for a public holiday.
Indian operators are increasingly becoming a target for foreign investors as the country's mobile market continues to boom, adding around nine million new subscribers every month.
Russia’s Sistema JSFC (London: SSA) has been steadily increasing its stake in Sistema Shyam TeleServices Ltd. from 10 percent, to 51 percent, and now to 74 percent, as the regional operator has snagged licenses and spectrum to take it nationwide. (See Sistema Ups Shyam Stake and Shyam Gets New Licenses.)
Another Middle East operator, United Arab Emirates-based Etisalat , has also been sniffing around Indian operators for an investment opportunity, holding talks with mobile operator Spice Telecom . (See Etisalat Eyes India's Spice.)
— Nicole Willing, Reporter, Light Reading