Open offer for Tata Tele ups telecom stocks

The open offer announcement for Tata Teleservices (Maharashtra) (TTML) resulted in a surge in all telecom stocks on the Bombay Stock Exchange (BSE), even though the Sensex fell 150.91 points (1.6 per cent) on Friday.

Earlier during the day, Japanese telecom major NTT DoCoMo and Tata Sons offered to acquire 20 per cent of TTML shares at Rs 24.70 per share through an open offer. The companies will have to shell around Rs 950 crore for the stake.

The offer opens on January 8, 2009, and will close on January 27, 2009. This follows NTT DoCoMo's announcement on Wednesday to acquire a 26 per cent stake in Tata group's unlisted company — Tata Teleservices (TTSL) — for $2.7 billion.

The stock prices of TTML closed at Rs 20.19 on BSE today, registering an increase of around 12.29 per cent from the Rs 17.98 recorded on Thursday. Similarly, the prices of the leading telecom player Bharti Airtel rose 2.99 per cent, Tata Communications rose 2.39 per cent, MTNL 2.22 per cent, Idea Cellular 1.98 per cent and Reliance Communications 1.88 per cent.

"The main reason for the rise in telecom stocks is the TTML open offer announcement. The stake sale of Tata Teleservices (TTSL) – the unlisted Tata group telecom company – took place much above the expected valuations, and this had a rub on effect on other stocks,” Harit Shah, an analyst with Angel Broking, said.

The Sensex closed at 9536.33 points, lower from the 9385.42 points recorded on Thursday.

Meanwhile, in a media briefing Tata group Chairman Ratan N Tata said: “Our partnership with NTT DoCoMo is going to be a long-term partnership. . .”

“. . . this will give the public a wider range of products and excellent bases of service not only in current technologies but in the technologies yet to come," he added.

Commenting on the acquisition, TTSL Managing Director Anil Sardana said the company would issue fresh equity to NTT DoCoMo. Declining to elaborate further, he said the details were only being worked out. He also stated that the company expects to increase revenues from data services by using the experience and expertise of NTT DoCoMo.

At present, 11 per cent of the company’s revenues come from data, which is higher than the industry average of 8 per cent in India. TTSL is India's sixth-largest operator.

Sardana said that company, which had received crossover spectrum, will launch its GSM services in January 2009. The company was also betting on the introduction of mobile number portability (MNP) that would increase its subscriber base in the country.