Hughes Tele Zooms On Merger Talks

Hughes Tele.com (India) bucked the weak sentiment on the markets and witnessed huge volumes following reports that Tata Teleservices is in final talks with Hughes Network Systems to merge with the US firm's local fixed-line phone unit Hughes Tele.com. On the BSE, the stock settled up 17.86 per cent at Rs 8.25 (face value Rs 5), off from its intraday high of 8.40. More than 115.05 lakh shares change hands on the counter. On the NSE, more than 244.15 lakh shares changed hands.

Dealers at a domestic brokerage house said: "In the last few trading sessions, most of the trades on the counter have been marked for delivery-based, indicating huge interest."

 

Tata Teleservices had recently reported that is in the final stages of talks with the US-based Hughes Network Systems (Hughes Tele.com's parent) to merge the former with Hughes Tele.com. An earlier attempt at merging the fixed-line businesses of the unlisted Tata Teleservices and Hughes Tele.com was called off in January 2002, after both sides disagreed on valuations.

Tata Teleservices, it is believed, will acquire more than 50 per cent stake in Hughes Tele.com. If the deal goes through between Hughes Tele.com's promoter Hughes Network Systems (HNS), Ispat Industries Ltd and Alltel, then Tata Teleservices will have to make an open offer as per Sebi's takeover code.

Earlier, reports suggested that Tata Teleservices would pay around Rs 8.30 per share of Hughes Tele.com, a premium of 12.9 per cent from the current traded price of Hughes Tele.com. Initially, Tata Teleservices may acquire 49 per cent stake in Hughes Tele.com.

Hughes Tele.com, formerly known as Hughes Ispat, is a company promoted by the Ispat group, the Hughes group and Alltel Corporation, which hold 24.85 per cent, 24.3 per cent and 6.5 per cent stake in the company respectively. The Hughes group, controlled by General Motors, US, is a global supplier of telecom equipment and information and entertainment services.

Hughes Tele.com and Tata Teleservices had earlier signed a memorandum of understanding (MoU) to explore possibilities of merging their fixed-line telephone operations in Maharashtra and Andhra Pradesh. Prior to that, an agreement between the two was called off in January 2002 because of differences in valuations of their respective businesses.