Can you tell me as to why is the government planning to sell its stake in Tata Communications?

You would perhaps recollect that long back the government had divested part of its stake in VSNL, the international long distance carrier, to Tata Communications. The government now plans to sell the entire stake in Tata Communications which is currently to the tune of 26.12%. This deal will be completed in the current fiscal year itself; that is before March.

In the year 2002 the government hived off 75% of its stake in VSNL to Panatone which later became Tata Communications. Currently, the government is part of the promoter group of TCOM which holds 74.99%. Out of that, Panatone holds 34.8%; government holds 26.12% and Tata Sons holds 14.07% in TCOM. The remaining 25.01% is held by general public.

It is estimated by the government sources that the sale of 26.12% in Tata Communication at the current market price will fetch the government a valuation of close to Rs.8,400 crore. This will help boost divestment revenues this year when the government had set a divestment target of Rs.210,000 crore and it is still way off the target.