CCI Approves Acquisition of 26.12% Shareholding in Tata Communications Limited by Panatone Finvest Limited.

On February 22, 2021, CCI approved the acquisition of 26.12% shareholding in Tata Communications Limited (‘TCL’) by Panatone Finvest Limited (‘PFL’). Both PFL and TCL are a part of the Tata Group, which is ultimately owned by Tata Sons Pvt. Ltd. (‘Tata Sons’).[1]

The combination consists of two steps: (i) the Government of India (‘GoI’) proposed to sell up to 16.12% equity shareholding of TCL; and (ii) immediately after the first step, the GoI will sell to PFL a portion of or the entire balance shareholding held by the GoI in TCL i.e., up to 26.12% shareholding.

PFL is a Systematically Important Non-Deposit Taking Core Investment Company (CIC-ND-SI) registered with Reserve Bank of India. It is a subsidiary of Tata Sons and engaged in telecommunication services through its subsidiaries, Tata Teleservices Limited and Tata Teleservices (Maharashtra) Limited.

TCL is a facilities-based service provider of a broad range of integrated communications services. It generates revenue from three business segments – wholesale voice, enterprise and carrier data and others.

CCI identified overlaps in the following segments: (i) provision of international long-distance services (‘ILD’)-voice; (ii) provision of national long-distance services (‘NLD’) – voice; (iii) provision of internet service provider services (‘ISP’); (iv) provision of enterprise services; (v) undersea cable systems on a worldwide basis; and (vi) provision of ATM machine services on a pan-India basis.

CCI observed that the TCL’s market share for the provisions of ILD, NLD and ISP services is in the range of 5-10% and the incremental market share will only be 2% which is insignificant to cause any competitive harm. These segments are also characterised by the presence of several players with significant market shares.

In the market for ATM services and in the market for undersea cables, there are several big players present who will continue to provide significant competitive constraints to TCL and PFL.

Since there were no competition concerns arising out of the combination, the same was approved by CCI.

[1] Combination Registration No. C-2021/02/814

Published In:Inter Alia Special Edition - Competition Law - May 2021 [ English
Date: May 31, 2021