Tata Communications Signs JV Agreement with CEC Ltd

By guest • June 19, 2008

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Tata Communications (formerly VSNL), has signed an equity joint venture agreement with the shareholders of China Enterprise Communications (CEC) Ltd. This will enable Tata Comm. to acquire 50-per cent stake in the Beijing-based company.

This engagement will enable Tata Communications to expand their footprint in Asian markets as they are very lucrative. It will bank on the fast growth seen in the Chinese market by providing high quality networking services to domestic and multinational enterprises there, according to Mr. Srinivasa Addepalli, Senior Vice-President (Corporate Strategy), Tata Communications. However, Tata Communications did not disclose the financial details of this deal.

CEC is a value-added telecommunications services and integrated IT solutions provider headquartered in Beijing, China. CEC was recently awarded a nationwide IP-VPN (Internet Protocol Virtual Private Network) service license by China’s Ministry of Information Industry (MII), the first telecom valued-added service license granted to a non-facilities based service provider. CEC network reaches throughout China, with no regional restrictions on its service capabilities. CEC provides VPN connectivity reach into 347 cities in China, including a dual-pop presence in tier-one cities like Beijing, Shanghai, Guangzhou and Shenzhen. This reach complements Tata Communications’ VPN presence in 120 Indian cities and 19 other major business capitals in North America, Europe and Asia.

Tata Communications signed the pact through its wholly owned unit, Tata Communications International Pvt Ltd. The city-based provider of voice and data services is open to acquisitions that will bridge gaps in its service offerings and also help in its pursuit of enhancing geographical reach, and strengthening their foothold in Indonesia, Thailand, Vietnam and the Philippines where they already have entry-level presence.

“Tata Communications understands and respects the complex, fast-changing and extremely competitive Chinese telecom environment and the needs of customers requiring seamless end-to-end connectivity. This is an innovative step in our ongoing effort to enable connectivity and managed services across strategic regions and emerging markets that are of high value to our global customers,” Vinod Kumar, President, Data and Mobility Services, Tata Communications.

Separately, Tata Communications has earmarked $500-$600 million in capital expenditure for the fiscal 2008-09, Mr. Rajiv Dhar, Chief Financial Officer, said in a conference call with analysts on Wednesday. The company will spend around $250 million on expanding its cable network.

CEC is majorly owned by CITIC (China International Trust and Investment Corporation); other investors of CEC include SASAC (State-owned Assets Supervision and Administration Commission) and CE-SCM (Council for Ecumenical Student Christian Ministry). Tata Communications’ investment in CEC is based on various closing conditions as well as approvals from and the relevant Chinese governmental and regulatory bodies, including the MII and the Ministry of Commerce.

Source: Financial Express

This is a guest post by Chinmay Sane who also writes on his personal blog “24 hours Masti“.