Singapore Technologies Telemedia to buy 74 % of Tata Communications data centre business

Posted on:20 May 2016 17:45:53
Singapore Technologies Telemedia to buy 74 % of Tata Communications data centre business
20 May 2016 Current Affairs: Ending months of negotiations, Singapore Technologies Telemedia (STT) has agreed to buy a majority stake in some of prime data-center business owned by India's Tata Communications Ltd., valuing those operations at about Rs 4130 crore ($616 million). 

ST Telemedia, which is a unit of Singapore state-investment firm Temasek Holdings (Private) Ltd., through its arm through ST Telemedia Global Data Centres (STT GDC),will acquire a 74% stake in data centers in India and Singapore, while Tata Communications will hold the remaining 26% stake, a joint statement from both the companies .

The transaction will include Tata Communications' 14 data centres in key cities across India -- Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Hyderabad and Pune -- and its three Singapore facilities. In 2014, the Indian data centre business of Tata Communications was transferred to its wholly-owned subsidiary Tata Communications Data Centers Private Ltd (TCDC) through a court approved process. These centres currently service a highly-diversified customer base, including blue chip enterprises in  Asia, e-commerce platforms and global multi-national corporations. Both parties will work in partnership to ensure service continuity for customers and employee engagement. 

Tata Communications will retain a stake in the colocation market in these important markets, while honing its focus on the development and introduction of its advanced managed services portfolio (including IP, cloud enablement and unified communications services), and continuing to invest in its strategic partnerships globally. 

For 9M FY16, managed services, including data centre operations, contributed 31% or Rs 2407 crore of data services revenues, according to a company's investor presentation dated April 2016. Data Centres alone contributed Rs 650 crore revenues in the same 9 month period ending December 2015. 

India is one of the fastest growing markets for cloud services in the world, estimated to grow from $423 million in 2013 to $1.3 billion in 2017, according to research firm Gartner. 

Amazon was among the potential suitors for the Tata asset which had also drawn interests from Google and private equity players like Advent, Carlyle Group, Blackstone and Bain Capital. 

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