Tata Telecom board nod for demerger

By Our Special Correspondent

MUMBAI, MARCH 9. The board of Tata Telecom at its meeting held today approved a scheme of demerger of its TataFone division into a separate company. This company, ITel Industries Pvt Ltd, is promoted by Tata Industries (TIL) and will become its 100 per cent subsidiary.

The demerger will enable Tata Telecom to focus exclusively on the high-end enterprise solutions business in collaboration with its international partner, Avaya of the U.S. Commenting on the spin off, Mr. Niru Mehta, Vice-Chairman, Tata Telecom, said, ``This is a win-win situation for all parties involved. Tata Telecom will now be able to exploit its technological skills and its association with Avaya to focus on the high value top-end enterprise solutions business where it expects to build an undisputed leadership position for itself.''

Mr. Kishor Chaukar, MD, TIL, said, ``ITel has a better synergistic fit with TIL, which has large interest in the telecom sector. We intend to support ITel fully which can now focus on the telecom terminal equipment business. We will aggressively market opportunities in this area.'' ITel will retain the brand name ``TataFone''.

The scheme of arrangement will be filed with the Bombay High Court shortly and once the scheme is approved by the High Court it will be effective from April 1, 2001. Based on a valuation by an independent valuer, RSM & Co, chartered accountants, the demerger will be effected at nil value. Till such time as all necessary statutory approvals are obtained, TataFone will continue to operate as a division of Tata Telecom.

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