Tata Comm seeks Govt nod to raise funds

The ongoing credit crunch seems to be beginning to hit the telecom sector also. Tata Communications (formerly known as Videsh Sanchar Nigam Ltd) has written to the Government seeking permission to raise money because the company’s fund position was reaching a “critical stage”. The company has told the Government that it required the money to carry out its expansion plans including bidding for the upcoming auction for the broadband wireless spectrum. More India business stories Tata Communications has asked the Government to relax the shareholders’ agreement that puts a cap on the total indebtedness of the company. The company has approached the Department of Telecom since the Government holds 26 per cent stake in Tata Communications. TataComm to raise Rs 3,000 cr via rights, debt “According to the MD and CEO of the company, its funds position is reaching a critical stage in January, and hence, the DoT as 26 per cent shareholder may like to allow the company to pursue non-debt funding in a manner consistent with its interest in the company,” said an internal DoT note. DoT sources indicated that the company’s request may be considered favourably. They said that the company has indicated that the existing financial crisis and deferred sales to customers was having an adverse impact on the its ability to execute expansion plans. The internal note said that the Tata Communication’s Board has taken the decision to go-ahead with the sale of a part of its holding in Tata Teleservices to NTT-Docomo. The transaction is expected to yield about Rs 430 crore to the company. Sources close to the company said that Tata Communications had enough money to carry out its daily operation but was looking to raise additional funds for meeting its growth plans. “Funds reaching critical stage should not be read as if the company is facing some acute shortage in money for its functional needs.“As a growing company, Tata Communications needs to keep investing in new opportunities for which funds are required,” said a company source. Tata Communications stock price closed at Rs 487.50 on Monday at the BSE.