LIC buys 6% AT&T stake in TechM

US-based telecom services provider AT&T has sold a 6.02 per cent stake in Pune-headquartered Tech Mahindra (TM) to India’s largest life insurance firm, government-owned Life Insurance Corporation (LIC), for an estimated Rs 560 crore.

LIC’s stake in TM has become 12.75 per cent. LIC also has a 4.43 per cent stake in Mahindra Satyam (earlier known as Satyam Computer Services).

AT&T sold a total of 7.03 per cent, which fetched it a total of Rs 656 crore. The names of the buyers other than LIC have not been disclosed.

LIC’s transaction at Rs 762 per share values TM at Rs 9,300 crore.

In March, AT&T had acquired an 8.07 per cent stake in TM for $34.5 million (Rs 155 crore) by exercising a 2005 option agreement to buy a stake in the company. By selling these shares, it netted over Rs 500 crore in profits.

AT&T is the second largest client for TM, contributing close to 18 per cent to its annual revenue. BT (formerly British Telecom), the company’s largest client, contributes over half of revenue.

Asked if the sale by AT&T would affect business prospects, Vineet Nayyar, vice-chairman of TM, said: “We have been working for the last four-five years with AT&T, our role has steadily grown and quite coincidentally, only yesterday, we were advised by AT&T that they have selected us as what they termed ‘The Best of the Best’ in terms of service providers and a special award is being given to us. They will even give us a seal to put that on our letterhead.”

A formal AT&T statement on the divestment said: “Our relationship with Tech Mahindra offers strategic advantages to AT&T, and we plan to continue to work with Tech Mahindra to meet AT&T’s information technology needs.”

Analysts feel LIC’s stake increase would also translate into an outsourcing opportunity for Mahindra Satyam. LIC is also is a big technology user.