BT is selling its 9.1 per cent stake in Tech Mahindra in a deal expected to raise about $183m (£113m) and see the British telecoms operator exit an Indian IT services group it co-founded more than two decades ago.
The Tech Mahindra shares are being sold at a floor price of 855 rupees ($15.68), according to a term sheet, a discount of 2.8 per cent from Tuesday’s 879.50 rupees closing price. The stock is up about 53 per cent this year.
BT, which set up technology outsourcing services provider Tech Mahindra with India’s Mahindra & Mahindra in 1986 and was its second largest shareholder in the past, has been gradually paring its stake in the Indian joint venture.
It sold 14.1 per cent of Tech Mahindra stake for about $250m in August.
Britain’s biggest fixed-line telecoms company is also one of the major clients of Tech Mahindra, which provides technology services to global telecoms operators, and its exit is likely to cloud the outlook for future contracts from BT. JP Morgan and Credit Suisse are advising BT on the share sale, and the shares will change hands on the Indian stock exchanges via block deals yesterday morning, the term sheet showed.
BT had to rely on deep cost cuts to maintain its full-year earnings outlook after an adverse regulatory ruling and weak European corporate demand sent revenues down nine per cent in the second quarter.
City A.M. Reporter