Tech Mahindra, BT in $1bn deal

MUMBAI: Tech Mahindra, the Pune-based software unit of Mahindra & Mahindra, has signed a five-year deal to provide strategic sourcing contracts with BT that would generate revenues worth over $1 billion.

Tech Mahindra is also likely to bid for the UK operations of Tiscali, the Italian internet giant.

Highly placed sources said that the bid could be worth over £600 million. At present, Tiscali has 1.4 million broadband subscribers and 50,000 pay TV customers in the UK.

Last week, Tiscali has put its UK division up for sale for $1.17 billion. Analysts said if Tech Mahindra acquires the company’s UK division, then it would give Tech Mahindra tremendous boost as Tiscali is one of the main independent European telecommunication companies, with one of the largest and most interconnected IP networks in the world.

The BSkyB, Orange, Carphone Warehouse, apart from Tech Mahindra, among others are likely to be interested in the business and Tiscali’s UK operations sale would be completed March 2007.

Vineet Nayyar, vice chairman and managing director, Tech Mahindra, said on the tie-up with BT, “This new opportunity will enable us to assist BT serve their external customers even more effectively.”

“BT is sourcing the best skills around the world to deliver outstanding service and value for our customers whilst contributing further to continued operational efficiencies,” said Hanif Lalani, Finance Director, BT Group.

Experts believe that Tech Mahindra’s business is growing at rapid speed as the company registered a profit of Rs 64 crore in 2004, which rises to Rs 235 crore in just two years. As the company focuses more on the telecom industry, it sees a huge market in Europe.