Case Analysis: Tata Communications Emerging Market growth opportunity Case Solution

1         Tata Communications

Tata Communications is a leading global communication provider that offers its services from mobile networks to Internet Service Provider (IPS). The company was founded in 1968 by Jamsetji Tata. Communication is not the only thing the company deals in, since it is a conglomerate. Therefore, it has a wide range of unrelated diversified businesses that include tata motors, tata communications, tata consultancy business, and so on. When it was founded in 1968, it was India’s first consultancy company, its infrastructure and market reputation make it India’s largest IT Company. Tata Communications came into existence after the conglomerate acquired VSNL, which was a large telecom company.

1.1        Problem Statement

The company was considering a growth opportunity through which the company can enter the Russian telecommunication market. Moreover, there were several potential benefits, which the company will have after the acquisition of the Russian Telecom Company known as Pascal. The company was selling because major investors and shareholders of the company were private equity firms, which wanted to exit from the business. Pascal had an immense employee base and a well-maintained business structure. Moreover, the company had a positive market position as a WiMAX and ISP service provider in the last five years. This opportunity came into TCL’s knowledge when Pascal’s CEO called their CEO, Vinod Kumar to consider the opportunity, as this acquisition could pave their way to enter the emerging Russian market. Now the company has to choose between a full acquisition or on buying a strategic stake in the company. In addition, the company has to look at how much value can Pascal add to TCL. Lastly, TCL has to decide how fast it should purchase Pascal since; if the company delayed the decision, there are other buyers lined up that can acquire Pascal to strengthen their market share.

1.2        TCL’s Operations: A Closer Look

TCL is the world leading telecom company and if we have look in its past, it can be seen that the company was one of the largest telecommunication providers in India by 2012. That same year it had the largest submarine cable network in the country, its profits were around $3 billion, and it had an employee base of almost 7000 people.

2         Evaluating Pascal the Russian Opportunity

As discussed earlier, Pascal is a telecom company that can give TCL instant access to Russian market. While the company can significantly add potential value to the TCL’s structure, the details of acquiring the company and its advantages and drawbacks are as follows.

2.1        Basic Advantage

There may be several advantages, which the acquisition of Pascal can give to TCL but the major advantage of the acquisition is that the TCL will have a smooth entry towards the emerging Russian market. TCL can enhance its technology by acquiring the company. In addition, TCL can take advantage of already build infrastructure and can strengthen its business in the region by just injecting some funds into the business after the acquisition. Moreover, the product line will become larger. Lastly, the company will have several new services that currently are not present in its umbrella.

2.2        Pascal’s Background

The company was founded by a group of telecom executives, which included Rick Murphy who was an American Telecom industry expert with experience of over 25 years in US, Europe, and Russian telecom industry. The company’s major business was coming by corporate clients since; its enterprise clients were providing almost 60% of the overall business, which amounted to almost $65 million...................

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