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Tata Communications looks to offload data centre business to settle debts

Company’s $1.5bn debt could lead to second $500m+ asset sale in the group since last year.

By Joao Lima

Tata Communications is reportedly looking to sell its data centre business for $500 million to help pay its $1.5 billion debt bill.

The $3.2bn company is said to have started the process of selling the unit, and hired Japanese bank Nomura tofind prospective buyers, according to The Times of India.

Tata Communications’ data centre unit reported $150 million in revenue and $40 million in operating profit last year, according to the company’s 2014 financial report.

In the report it says: "In the long run, unless the company is able to raise equity funding, its ability to raise additional debt funding may be restricted. This, in turn, could adversely affect the capital expenditure programme in the long run."

Companies like NTT or private equity funds like Providence and Advent could show interest in acquiring the unit, according to the paper’s sources.

A spokeswoman said: "We can confirm that we are looking at a range of strategic options concerning the future ownership of our data centre infrastructure in India, and possibly in Singapore.

"Tata Communications has retained Jefferies LLC to advise the Company in connection with exploring these strategic alternatives."

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The telco also issued a statement saying: "The company does not intend to make any further press release or announcement regarding these matters unless and until it enters into a binding, definitive agreement with respect to its sale of its data centre infrastructure in India and/or Singapore."

The company owns 44 collocation spaces worldwide, including in the UK, with over one million square feet of commercial space.

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