Tata Communications on Thursday signed a definitive agreement with ST Telemedia, a unit of Singapore state investment firm Temasek, to sell 74% of its data centre business in India for $467 million and an equal stake in its Singapore data centre business for $168 million, thus taking the full value of the deal to $635 million.
In a stock exchange filing, the company said that the joint venture will include Tata Communications’ 14 data centres in key cities across India and its three Singapore facilities. The data centres currently service a highly-diversified customer base, including blue chip enterprises in Asia, e-commerce platforms and global multinational corporations, the company 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,” Vinod Kumar, managing director and CEO, Tata Communications, said adding, “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”.
In a statement both companies said that the investment will help STT to further expand and strengthen its global data centre network to span four geographies, including India and China in several service areas including IP, cloud enablement and unified communications services), and continuing to invest in its strategic partnerships globally.
“Since ST Telemedia’s initial investment in the data centre business in mid-2014, we have made remarkable progress in building a formidable data centre footprint internationally with strategic presence in key economic hubs to capture industry demand. The latest addition of India to the STT GDC network will be a major impetus to advance the company’s ambition to be a significant global data centre service provider,” said Sio Tat Hiang, executive director, ST Telemedia.
In 2014, the Indian data centre business of Tata Communications Limited was transferred to its wholly-owned subsidiary Tata Communications Data Centers Private (TCDC) through a High Court approved process.
Today, TCDC owns and operates a total of 14 data centres, including facilities in Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Hyderabad and Pune.
The deal marks Tata group’s continuing drive to pare debt by loss making or non core assets. Tata Communications’ gross debt stood at $1.4 billion in FY15. Tata Group is currently looking for a buyer for its loss making UK steel business. On Wednesday, the group’s hospital arm Indian Hotels announced plans to Taj Boston hotel in the US for not less than $125 million.