Tata and Birla in a cellular merger

BANGALORE: Two of the country's largest business houses have joined in a
cellular deal. Tata and Birla have signed a memorandum of understanding to merge
their cellular telephony businesses into a single entity with enterprise value
estimated at $1 billion.

The deal is styled in a three-way equal stakes joint venture between Tata
Industries, US giant AT&T and the Birla Group. After this joint venture (JV)
there will be a single cellular telephony monolith instead of two (Tata
Communications and Birla-AT&T), that will control circles in Andhra Pradesh,
Maharashtra (excluding Mumbai), Gujarat and Goa. According to current figures,
it will have a consumer base of over 1.5 lakh. A press release issued on this
says, the markets covered by this JV constitute nearly 25 per cent of national
telecom subscribers.

Tata Industries chairman Ratan Tata said, "The Tata, Birla and AT&T
combine brings together three strong and committed partners. This alliance marks
a significant step in the process of consolidation in the telecom sector in
which we intend to be a major player." Aditya Birla Group chief Kumar
Mangalam Birla said, "Telecom services are a focus business of our group
and have significant growth potential. This alliance is a forward step that will
help us take this business ahead and most importantly it offers a platform for
growth in a rapidly consolidating sector." Currently, it is not quite clear
how the deal will be structured. The board is likely to have equal
representation from the three partners.

This announcement comes close on the heels of the Tata group's decision last
month to buy out Bell Canada's stake of nearly 40 per cent in Tata
communications Ltd.. The Tata Group holds a little over 50 per cent in the
company, with AIG holding the rest of the equity. Birla AT&T is currently a
51:49 venture between the Aditya -Birla Group and the global telecommunications
company, AT&T.