Continuing India’s trend of spreading its wings globally, Ratan Tata’s IT and telecommunications business, Tata Communications, signed an equity joint venture with shareholders of China Enterprise Communications Ltd (CEC) to acquire a 50 percent stake in the Chinese firm for an undisclosed amount, reuters reported.
The joint venture, signed through Tata Communication’s subsidiary, Tata Communications International, will provide networking services to domestic enterprises and MNCs in China.
“Emerging markets is a focus area for TC. China is a market we have been exploring for over a year now. We entered into a commercial relationship with China Enterprise Netcom Corporation (China Entercom) earlier this year. Our intention now is a strategic entry into that market, which is considered bigger than India for broadband and other services,” TC’s senior vice-president (corporate strategy) Srinivasa Addepalli told the Economic Times at a media briefing in Mumbai.
Without disclosing financial details, he said: “It is a modest investment compared to the kind we have been making. This opens up a new market for us.”
Beijing-based CEC is a value-added telecom services and integrated IT solutions provider. It has a nation-wide virtual private network (VPN) service licence and its network is spread across the country. Major shareholders in CEC include, chinese state financial conglomerate the CITIC Group, State-owned Assets Supervision and Administration Commission (SASAC) and CE-SCM.
In February, TC had said it would expand its global VPN to China through a network-to-network interface (NNI) agreement with China Entercom, another value-added telecom services and integrated IT solutions provider.
The Tatas-owned firm has announced a capital expenditure of $2 billion spread over the next three years. The investment would be across its submarine cable business, broadband expansion, building data centres and enhancing managed services capabilities. A large part of the capex is targeted at emerging markets, including China and South Africa, where TC has a 26% stake in Neotel.
