Tulip Telecom will restart the process to sell equity stake in its data centre unit in Bangalore. The company had announced in 2011 that it would sell 30 per cent stake to raise nearly Rs 300 crore but plans ran into rough weather after the parent company got bogged down by debt issues.

Hardeep Singh Bedi, Chairman of Tulip Telecom, told Business Line , “We have gone through a corporate debt restructuring which will improve the company’s financials. We will now pick up plans to sell equity in our data centre unit soon.”

Tulip Telecom had announced investments of Rs 900 crore to set up a Tier-4 data centre with an area of 9 lakh sq. ft. in Bangalore. The company’s primary business is in offering enterprise communications services in the form of leased line capacity and corporate Internet connectivity to industries such as banking, IT and BPO.

But Tulip Telecom is now a shade of what it was two years ago, when it was expected to be a $1-billion company by 2014. “We did the mistake of taking short-term loans,” said Bedi. The firm had a debt about Rs 2,700 crore as of September 2012.

The company’s stock fell nearly 70 per cent in 2012, prompting many analysts to raise flags on the firm’s rising net debt. Tulip Telecom had defaulted on redemption of $140-million convertible bonds, which were due on August 26, 2012. The debt-ridden firm had also delayed salaries. “There is a short-term cash crunch due to the debt restructuring. Things will improve from here on,” said Bedi, adding that the banks have given moratorium on payments and lower interest rates in the CDR concluded recently.

thomas.thomas@thehindu.co.in

Related Topics