Tata Communications to invest $300 million to expand network, platform in FY18

Tata Communications Ltd will invest $ 300 million into expansion of network, platform and software during 2017-18, and is also looking at acquisitions in new service areas such as Internet of Things, mobility and cloud.

"In telecom, networks need to to expand in terms of scale and reach to create infrastructure closer to customers. So, there is a natural amount of spend that is required...We will be spending $ 150 million on network, and $ 150 million into platform, software and other capabilities," Vinod Kumar, MD and Group CEO, Tata Communications Ltd told PTI.

He said that half of the overall capex would be channelised towards "augmenting network capacity" both the domestic and international leg.

Tata Communications -- which last month announced that Tata Communications (Netherlands) has made an investment into Teleena Holding to become single largest shareholder with 35 per cent stake -- said it continues to look for similar investments.

Tata Communications (Netherlands) BV is a wholly-owned indirect subsidiary of Tata Communications Ltd.

Asked if the company is looking for more acquisitions, Kumar said, "We are always looking... We will continue to look for...Technology specific investments in the areas of our new services to help us augment our capability and go to market faster," he said.

The acquisitions or investments will be targeted at areas such as security, IOT, mobility and cloud, he said.

However, he did not divulge the ticket size. The investments in Teleena Holding bolsetered the company's cross-border mobility services capability, he said adding there are no immediate plans to increase the stake.

"They have created advanced technology in the space and we will use that technology as a cornerstone for the service that we are building. There is no plan to immediately increase the stake," he said.

Kumar said that Tata Communications' debt would come down to the extent of $ 300 million as a result of two transactions -- divestment of data centre, and sale of South Africa-based telecom arm Neotel to Liquid Telecom.

"We have $ 1.4 billion of debt and that will come down by about $300 million when we finish these two transactions (sale of datacentre and Neotel). It is already reflecting on our balancesheet...These moves are already strengthening the balance sheet," he said.

On whether the company had plans for further asset sale, he said, "No".

Meanwhile, in a BSE filing, Tata Communications announced successful completion of Singapore data centre joint venture transaction with ST Telemedia (STT), a global investor in communications, media and technology businesses. 

In May 2016, the two companies had announced definitive agreement as part of which ST Telemedia, through subsidiary, ST Telemedia Global Data Centres (STT GDC), agreed to acquire 74 per cent stake in Tata Communications' data centre business in India and Singapore.

Tata Communications will hold the remaining stake as a minority shareholder.

While India data centre transaction was completed on October 19, 2016, the Singapore data centre joint venture transaction has concluded today.

"Since the May announcement, both companies' management teams have been working closely to identify areas for business integration to enhance customer service and realise the full potential of the business partnership," Tata Communications said in a BSE filing.

The two partners will ensure a smooth transition for existing customers and employees of Tata Communications' India and Singapore data centres into the broader STT GDC platform, it added.