Tata Communications (Tata Comm) and China Entercom Communications (CEC) on Thursday jointly called off their equity joint venture application because of uncertainity in getting approval from the Chinese authorities.

This agreement was signed by Tata Comm in June 2008 to acquire a 50% stake in CEC. The JV would have helped the Tata firm enable connectivity and establish managed services across strategic regions and emerging markets. It would have also aided the company in expanding footprint in the lucrative Asian markets. The JV would have given Tata Comm an entry into the fast-growing Chinese market also.

CEC is a value-added telecommunications services and integrated IT solutions provider headquartered in Beijing. It has network reach throughout China, with no regional restrictions on its service capabilities. CEC provides virtual private network (VPN) connectivity reach to 347 cities in China, including a dual-pop presence in tier-I cities like Beijing, Shanghai, Guangzhou and Shenzhen. Tata Com has VPN presence in 120 Indian cities and 19 other major business capitals in North America, Europe and Asia.

Speaking on the development, Srinivasa Addepalli, senior vice-president of corporate strategy Tata Comm, said: ?The parties have mutually agreed to withdraw the EJV application due to the uncertainty of whether any regulatory approvals from the Chinese authorities were forthcoming.? ?While the EJV has been called off, we will continue to work with CEC to further our plans in China. Our commercial relationship with CEC continues to give us network access in China, which serves our customers seeking connectivity into this geography,? he added.

CEC is majority owned by CITIC (China International Trust and Investment Corporation); other investors of CEC include SASAC and CE-SCM. Tata Communications? investment in CEC was subject to various closing conditions as well as approvals from the relevant Chinese governmental and regulatory bodies, including but not limited to the MII and the ministry of commerce.

According to an analyst with a multinational bank, ?The major enterprise network providers in China have government stake and hence, scopes are negligible for an Indian company to get an access to that sector.?

Through the cooperation with CEC, Tata Comm will provide VPN services to the main cities of China. This reach complements Tata Comm?s global VPN presence.