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NTT Communications to own 100% stake in Netmagic after FIPB clearance

Update: A spokesperson for Netmagic said told MediaNama that the 100% stake in it is being picked up by NTT Communications, a wholly owned telecom subsidiary of the NTT Corporation, and not by NTT Docomo. An earlier version of the story wrongly referred to NTT Docomo, which is a telecom operator in Japan. We apologise for the error.

Japanese telco NTT Communications has received clearance from the FIPB to increase its stake in Mumbai-based network infrastructure provider Netmagic Solutions to 100%. The stake is worth Rs 533.83 crore. NTT, earlier held an 81.63% stake in Netmagic after initially holding a 74% stake in 2012. At that time of investment, NTT had mentioned that the acquisition will help the company to focus on business-to-business solutions, including its plan to provide global end-to-end cloud services.

Netmagic is a managed IT services provider specialising in Data Centers, CDNs, Managed Hosting, Managed Security, Cloud Computing, and Application Hosting, among others. Netmagic also has 7 datacenters located in Mumbai, Bangalore, Noida (Delhi-NCR) and Chennai. The company also claims to serve 2000 customers globally including firms from industries like financial services, telecom, online media, online trading, travel among others.

NTT might look at offering broadband after Tata Tele fall out

Netmagic also holds an ISP license, which could possibly be used by NTT to offer internet services in the country. NTT Communications also received a National Long Distance License in December 2015. At that time, the Japanese said that it will look at launching “IP-VPN and other reliable, high-quality connectivity services, that are required by businesses in India.” Although these services are limited to enterprise customers, NTT might look into entering broadband sector after trouble with its Tata Docomo brand in India, and especially after more telecom companies are getting into the ISP sector.

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NTT also has a significant stake in Indian telecom operator Tata Teleservices through which both companies jointly operate the Tata Docomo brand in India. After the venture started posting continuous losses, Tata was ordered to pay $1.17 billion in damages to NTT by a London court in June last year. The terms of the agreement between both companies provide an option for the acquirer (NTT Docomo) to request a suitable buyer for at least 50% of the acquired price in case venture turns non-profitable. The payout was however blocked by RBI due to foreign exchange regulations.

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