Tata Seeks a Warchest

Telegeography reports that Indian carrier Tata Communications is looking to raise some INR30B via debt and a rights issue, which works out to about $600M.   They hope to use the money to fund M&A, apparently in the USA and Europe.   Apparently though, they first need permission from the Indian government, which owns more than a quarter of the company, and they have asked before and not gotten it.

But it does make sense of course, with valuations at such incredibly low levels in the US market.  Both Tata Communications and Reliance Globalcom have been increasingly aggressive in the last few years, seeking to challenge the ranks of large US and European multinational telecoms.   The and the CDN partnership with BitGravity and the rollout of Cisco’s telepresence are just some of the more visible moves of a steady drumbeat of news out of Tata.

They don’t have the money yet, but suppose they were to get it?  What would they buy?  These days, $600M can take you pretty far.  I think Tata’s next move may be into the US metro market, in the Tier 1 cities.  There are good values there, and the assets would fit well with their targeted customer segment of multinational corporations.

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Categories: Internet Backbones · Mergers and Acquisitions · Metro fiber