Tata Communications is planning to hive off its data centre business into a separate subsidiary.
According to the company, carving the data centre business as a spate entity will enable it to raise finances independently. The business will require investments worth of Rs 15 billion over next five years.
Tata Communications, however, must get the government’s approval before hiving off its data centre business.
In the past, the Tata Group have faced challenges while raising debt in Tata Communications and had to request the Centre to relax the debt ceiling. The Centre, which owns 26.12 per cent stake in TCL, have to seek the President of India?s approval for this proposal.
As of September 2011, the book value of its data centre business was recorded at Rs 5 billion.
Tata Communications has stated that it provides data centre co-location, managed hosting and infrastructure as a service, and has around 19 per cent market share in the co-location business, which caters to over 700 service providers and enterprise customers in India. The company had revenues of Rs 2.65 billion from co-location business in India during 2011.
