Tata Comm gains on reports Google and Amazon in fray to buy data centre

Tata Communications rose 3.44% to Rs 416.20 at 10:14 IST on BSE on reports Google Inc and Amazon are in talks to buy the data centre business of the Indian company in a deal expected to fetch about Rs 4261.40 crore to Rs 4589.20 crore.

Meanwhile, the BSE Sensex was down 347.46 points, or 1.26%, to 27,260.36.

On BSE, so far 1.10 lakh shares were traded in the counter, compared with an average volume of 74,180 shares in the past one quarter.

The stock hit a high of Rs 418 and a low of Rs 405 so far during the day. The stock hit a 52-week high of Rs 504.90 on 15 April 2015. The stock hit a 52-week low of Rs 344.30 on 26 September 2014.

The stock had underperformed the market over the past one month till 20 August 2015, falling 14.04% compared with 2.86% fall in the Sensex. The scrip had also underperformed the market in past one quarter, falling 7.95% as against Sensex's 0.82% decline.

The large-cap company has an equity capital of Rs 285 crore. Face value per share is Rs 10.

According to reports, search engine giant Google Inc and ecommerce behemoth Amazon are among those in talks with the Tata Group to buy the data centre business of Tata Communications in a deal expected to fetch about Rs 4261.40 crore to Rs 4589.20 crore. Google Inc and Amazon are competing with private equity funds like the Blackstone Group, Carlyle, KKR, Bain Capital and Advent International, who are all looking to buy up to 74% stake in the data centre unit and take control of the business that is spread across 44 locations in India and abroad. The diversified Tata Group is likely to retain a minority stake, reports added.

Reports suggested that the transaction, if successful, will help Tata Communications reduce debt burden and concentrate on its core data carrier business. The company reportedly has net debt of Rs 9178 crore.

Acquiring large data centre operations will give access for companies like Google to penetrate into the Indian data market. Amazon Web Service, or AWS, is one of the leading data centre operators in the world and the company has aggressive plans in India, reports said.

On a consolidated basis, Tata Communications reported net loss of Rs 33.86 crore in Q1 June 2015, higher than net loss of Rs 21.38 crore in Q1 June 2014. Net sales rose 1.33% to Rs 5179.87 crore in Q1 June 2015 over Q1 June 2014.

Tata Communications is a leading global provider of A New World of Communications. With a leadership position in emerging markets, Tata Communications leverages its advanced solutions capabilities and domain expertise across its global and pan-India network to deliver managed solutions to multi-national enterprises, service providers and Indian consumers. The Tata Communications global network includes one of the most advanced and largest submarine cable networks and a Tier-1 IP network with connectivity to over 240 countries and territories across 400 PoPs, as well as nearly 1 million square feet of data centre and collocation space worldwide. Tata Communications' depth and breadth of reach in emerging markets includes leadership in Indian enterprise data services and leadership in global international voice.

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