Tata Communications (formerly VSNL) has entered into an agreement to acquire a 50 per cent stake in Beijing-based telecom and IT services firm China Enterprise Communications (CEC). However, the financials of the transactions were not disclosed.
Under the agreement, which is subject to receiving of regulatory approvals, the companies aim to offer networking services to companies operating in China.
"The proposed investment in CEC will help Tata Communications to have a direct presence in a growing Chinese market. China and India are the largest emerging markets and telecom companies across the world are looking to enter these markets," Tata Communications Senior Vice President (Corporate Strategy) Srinivasa Addepalli said.
Tata Communications had earlier entered into a network to network interface (NNI) agreement with CEC, which interconnected the two companies' multi-protocol label switching (MPLS) infrastructures.
CEC of Beijing provides VPN (virtual private network) connectivity to 347 cities in China, including dual points of presence in major cities like Beijing, Shanghai, Guangzhou and Shenzhen. It holds a nationwide IP-VPN service license from China's Ministry of Information Industry (MII). Tata Communications in turn has VPN presence in 120 Indian cities and 19 major business centers in North America, Europe and Asia.
Indian telecommunications companies have been expanding outside India, buying up submarine cable capacity, services capability, and access to customers. Reliance Communications, a large Indian mobile services provider, is for example in talks with MTN Group of South Africa for a merger.
"Tata Communications is looking at setting up presences in emerging markets across the world and China is one of the most important markets where telecom companies want to get into. This agreement enables us to provide our services in China, jointly with CEC," it said.
CEC has licences for operating Internet Protocol Virtual Private Network (IP-VPN), Internet Service Provider (ISP), call centre, online transaction and multi-communication service operations. It employs around 120 personnel and has 19 points-of-presence (PoP) in that country.
Tata Communications, in turn, has VPN presence in 120 Indian cities and 19 major business centers in North America, Europe and Asia.
China International Trust and Investment Corporation owns a majority stake in CEC, while other investors include SASAC and the management team of the Chinese company. Tata Communications has made the acquisition through its wholly owned subsidiary, Tata Communications International Pte.
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