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Update: Tata Sons To Offload 2.84% Stake In Tata Teleservices Maharashtra

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Update 3 (May 29): Tata Sons has submitted another notice of offer to the BSE, to sell 35 million equity shares (35,000,000 shares) of value Rs 10 each, representing 1.84% stake in TTML. The sale is expected to start on May 30, 2013 at 9.15 AM and close on the same day at 3.30 PM.

Update 2 (May 21): Tata Teleservices Maharashtra (TTML) has informed (pdf) BSE that Tata Sons will be selling 1.9 million shares (1,89,71,968 shares), which accounts for 1% stake in TTML. The sale is expected to be completed by June 4, 2013.

Update (May 17): Tata Sons has informed the BSE that it has cancelled the offer for sale, however it hasn’t disclosed any specific reason for this cancellation.

Earlier (May 16): Tata Teleservices Maharashtra Ltd (TTML) promoter Tata Sons has submitted a notice of offer to the Bombay Stock Exchange (BSE) to sell 51.62 million equity shares (51,623,679 shares) of value Rs 10 each, which accounts for 2.72% stake in TTML, through separate window provided by BSE and NSE for this purpose.

The company has appointed Tata Securities as the broker for this sale and has informed that the sale will start at 9.15 AM on May 17, 2013 and will close on the same day at 3.30 PM. The allocation will be made on a price-priority basis i.e. bidders with the highest price will be allotted shares at multiple clearing prices in accordance with SEBI OFS (Offer For Sale) guidelines.

TTML informed (pdf) that SEBI has permitted to undertake two successive offers within a time gap of three days and has also relaxed the mandated 12 week cool off period for promoters after any divestment through the OFS route. SEBI has also relaxed the maximum allocation limit of 25% of the offer size to a single investor, i.e. a single investor can be allotted more than 25% of the shares put up for sale.

SEBI Public Holding Regulations: This sale was mandated due to an amendment to SEBI’s Securities Contracts (Regulation) Act in June 2010, which requires all public listed companies to maintain a minimum 25% stake in public holding. Back then, the government had said that existing listed companies which has less than 25% stake in public holding, will have to reach the minimum 25% threshold through an annual addition of not less than 5% to public holding.

As of March 31, 2013, Tata Teleservices promoter group held 77.2% stake (pdf) in TTML. The promoter group currently comprises of Tata Teleservices Limited which owns 37.65% stake, Tata Sons which owns 20.72% stake, NTT Docomo which owns 12.12% stake and Tata Power which owns 7.24% stake. The remaining 22.8% stake is in public holding.

TTML Revenues: Earlier this week, TTML had posted a total loss of Rs 115.23 crore for the quarter ending March 31, 2012, a significant improvement from Rs 197.2 crore loss in the previous quarter and Rs 123.4 crore loss in Q4-FY12. The company had reported total revenues of Rs 702 crore, registering a 5.5% growth from Rs 665 crore in the previous quarter and a 6% growth from Rs 662 crore in Q4-FY12.

VAS and Data Revenues accounted for 37% of Tata Teleservices Maharashtra Ltd (TTML)’s total wireless revenues, a marginal growth from 33% in the corresponding quarter last year.

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