IDG News Service —
Tata Communications, a telecommunications company of the Tata Group, has entered into an agreement to acquire 50 percent of China Enterprise Communications (CEC).
The proposed joint venture, which becomes effective after receiving the necessary regulatory approvals in China, aims to offer networking services to Chinese operations of multinational companies as well as domestic Chinese companies, the companies said Wednesday.
Tata Communications announced in February a network to network interface (NNI) agreement with CEC, which interconnected the two companies' multi-protocol label switching (MPLS) infrastructures. This connectivity gave Tata Communications' customers VPN access to a number of locations in China.
The NNI agreement enabled Tata Communications to meet growing demand from its Indian and multinational customers for services into China, said Srinivasa Addepalli, senior vice president for corporate strategy at Tata Communications, in a telephone interview on Wednesday.
Through the proposed investment in CEC, Tata Communications will now have a direct presence in a growing market, and the integration between the two networks will be tighter, Addepalli added.
Tata Communications did not disclose the size of its investment in CEC. CEC will retain its current management team after Tata Communications' investment is complete, though there will be collaborative teams to take advantage of the capabilities of both companies, Addepalli said. Some of Tata Communications' current products and services may be introduced by CEC in China, he added.
CEC of Beijing provides VPN (virtual private network) connectivity to 347 cities in China, including dual points of presence in major cities like Beijing, Shanghai, Guangzhou and Shenzhen. It holds a nationwide IP-VPN service license from China's Ministry of Information Industry (MII). Tata Communications in turn has VPN presence in 120 Indian cities and 19 major business centers in North America, Europe and Asia.
Indian telecommunications companies have been expanding outside India, buying up submarine cable capacity, services capability, and access to customers. Reliance Communications, a large Indian mobile services provider, is for example in talks with MTN Group of South Africa for a merger.
