Tatas to sell VSNL stake in Intelsat and Immarsat

As per the agenda for the board meeting, VSNL plans to divest 75% of its holding in Intelsat and 100% of its holding in Inmarsat when these two companies go public in the near future.

Under Agenda items 5 and 6 (B3 and B4), it sought authorisation from the board to give power of attorney to Intelsat to sell 75 per cent of VSNL’s holding at a floor price of $21 a share.

It also sought an authorisation to have its entire stake in Inmarsat sold at a floor price of $11 a share through a similar power of attorney. According to insiders, offloading these two investments is expected to fetch over Rs 1,200 crore for VSNL. Speaking to The Indian Express Kishore Chaukar, a Tata director said that it is not possible to say how much VSNL would receive from the sale of Intelsat and Inmarsat shares at the moment. He said that while the two blocks of shares had been offered for sale, the extent of shares sold would be decided by the investment bankers to the respective IPOs at the time of placement.

If several stakeholders around the world offered their stakes for sale then the extent of sale would be decided on a pro rata basis by the investment bankers, he said. As to the reasons for divestment, Chaukar said the proposal had come from the VSNL management because they felt that there was no strategic value in being a shareholder of the two consortia and it would be better to encash their investment during the respective IPOs.

Inmarsat is the world’s largest commercial satellite communications services provider founded in 1979. Its constellation of communications satellites (Intelsats) provide international broadcast services.

It transformed itself into a private company in April 1999 and then planned to raise funds through an IPO that has been postponed twice due to the depressed telecom market. VSNL is a founding member of Inmarsat and holds a 2.02 per cent stake in the company.

Intelsat’s network of 21 satellites offer telephony, corporate network, Internet and broadcast services worldwide via these satellites to over 200 countries. It was founded in 1964 and has over 145 members and was privatised in July 2001. VSNL holds a 5.4 per cent stake in the company and its managing director S K Gupta is on the international board of Intelsat Ltd.

Intelsat plans to raise $500 million through a US IPO. It filed its document at the end of April and hopes to place the shares at $21 to $28 during the issue which is imminent. The floor price fixed by the VSNL board is the lower level of this price expectation. Intelsat’s shareholders such as VSNL have been allowed to offer their shares for sale during the IPO.