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Tata Communications sells 74% stake in data centre business for $634 Mn to ST Telemedia

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Tata Communication has sold its 17 data centres in India and Singapore for a sum of $634 million to Singapore Technologies Telemedia (ST Telemedia). Tata communications will continue to hold 26% of its stake in these 14 data centres in India and 3 data centres in Singapore. The move is aimed towards reducing debt and redeploy capital in other areas according to a statement given by the company.

The talks for the deal has been on for over a year now. Earlier, there were reports of even Google and Amazon emerging as prospective buyers of the massive data centre business of Tata Communications.

The company has one of the largest data centre businesses in India spanning over an area of 1 million sq. feet across 44 global locations and eight partner sites across Australia, Malaysia, Germany and the Netherlands.

According to the company, these data centres serve a diverse client base which includes blue chip enterprises in Asia, e-commerce platforms and global multi-national corporations.

In 2014, Tata Communications had transferred the data centre business to a wholly owned subsidiary Tata Communications Data Centers Private Limited (TCDC). Since then, TCDC has been operating 14 data centres in India including those in Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Hyderabad and Pune.

On selling majority stake in data centres, Vinod Kumar, Managing Director and CEO, Tata Communications, said,

“This new joint venture partnership will now allow us to hone our strategic focus on advanced services within the data centre that enable digital transformation for our customers, in addition to infrastructure services. Our new partnership also gives us the opportunity to redeploy capital behind other areas of our business, to further broaden the portfolio of services we can offer to meet our customers’ current and future requirements.”

This deal will also help Tata Communications to bring down its debt which according to Bloomberg had climbed up to  9,595 crores as of 30 September 2015.

On the other hand, ST Telemedia, which is a unit of Singapore’s Temasek Holdings, plans to use this partnership and leverage data centres of Tata Communications in varied locations to advance the company’s ambition to be a significant global data centre service provider.

“With this acquisition, STT GDC will further expand and strengthen its global data centre network to span four geographies, including strong bases in two of Asia’s largest growth markets—India and China,”

said ST Telemedia in a statement.

Both companies will be working together in partnership to ensure service continuity for customers and employee engagement.

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