ST Telemedia to buy 74% stake in Tata Comm’s data biz

Tata Communications Ltd, the teleservices company of India’s biggest group, to sell 74 percent share of its data center business to ST Telemedia (Singapore Technologies Telemedia). The entire deal is estimated to be around $635 million.

The sale will comprise 14 data centers in India and three in Singapore, as per the filing to BSE by the company. The data centers in India are valued at $465 million and the Singapore’s centers are worth $168.5 million.

ST Telemedia, a part of Singapore’s investment firm Temasek Holdings (Pvt) Ltd, will obtain 74 percent stake in data center businesses in India and Singapore whereas Tata Communications will keep the remaining 26 percent share, the companies said in a joint statement on Thursday.

Vinod Kumar, MD and CEO, Tata Communications, said, “This new partnership provides us the opportunity to divert the capital to other domains of our business in order to further enhance our services portfolio, so that we can meet the requirements of our customers, currently as well as in future.”

Kumar further said that the new joint venture would enable the company to emphasize more on advanced services like data security and hosting.

“With running cost of data centres quite high, this partnership with ST Telemedia would enable both the companies to bear some operational costs,” he added.

Commenting on the partnership, Sio Tat Hiang, chief executive ST Telemedia, said, “The recent addition of Tata Communications’ data center business in India to the ST Telemedia will give a much-needed push to advance the company’s aim to become a major data center provider in the world.”

According to Gartner report, India’s data-center infrastructure market is estimated to reach $2 billion in 2016, an increase of 5.2 percent compared to last year.

By 2019, the country will become the second-largest market for IT in the whole Asia-Pacific region, just behind China, the report added.