Tata Communications to rejig broadband business

Posted By: Religare
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Tata Communications to rejig broadband business
Planning to realign its broadband business, Tata Communication is all set to consolidate its broadband unit to have a better reach to the small and medium business. Tata Communication Internet Services emerged as a separate entity in March 2007.

The company soon after its emergence planned to introduce financial investors in the company, for which it had a talk with Singapore government's investment arm Temasek Holdings. The government auction held in May-June last year led the share-sale linked to Tata Communication Internet Service win the broadband wireless access spectrum.

However, the company could not bid due the high auction prices. Thus, it resulted in the Vinod Kumar management to led the retail broadband unit merge back with the parent company.

Tata Communication part of the salt-to-software Tata Group is a NYSE listed company and has revenue of Rs 11,026 crore. According to the analysts, the less than 6% contribution by the retail broadband business, led the company restructure its plan. Restricting of the company indicates that the company has diverted its focus towards small and medium business

The company is also leading the centre position in the controversy that involves773 acres of land. The government wants the land to be separated from the company, formerly known as VSNL, with the centre holding 51.12% stake in the realty firm.

However, as per the company"s latest filings with the bourses, nearly 50% stake is owned by Tata, whereas only 26% is owned by the government. The controversy has is making it for the company to raise act on it fund raising plans. As a result, funding of the expansion of the company has forced the company to under debts of $1.4 billion.

Noticing the company to be in red for last few years, the management strategized multi-prolonged turnaround strategy to increase its profit.

Story first published: Tuesday, May 10, 2011, 9:30 [IST]
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