BT Said to Consider Tech Mahindra Stake Sale in Indian Market

BT Group Plc, Britain’s largest phone company, may reduce its 30 percent stake in India’s Tech Mahindra Ltd. by selling shares through the stock market, according to three people with direct knowledge of the matter.

BT may also seek to sell about 7 percent to Mahindra & Mahindra Ltd., which owns 42.8 percent of the Indian software services provider, according to two of the people, who declined to be identified before a public announcement. Tech Mahindra has slumped 21 percent this year, valuing BT’s stake at about 29.7 billion rupees ($668 million).

“Investors are concerned BT needs the cash to pay the dividend on top of the possible pension costs,” said James Crawshaw, an analyst at Standard & Poor’s in London. He said the stake is worth about 5 pence per BT share.

BT Chief Executive Officer Ian Livingston said in May the company was reviewing options for its stake in the Indian software provider. The London-based company has reduced its holding in the venture following a share sale in 2006.

Dan Thomas, a spokesman for BT, said the company doesn’t comment on rumor and speculation. Prasenjit Roy, head of corporate communications at Pune-based Tech Mahindra, also declined to comment on market speculation. Bharat Doshi, chief financial officer of Mumbai-based Mahindra & Mahindra, didn’t answer calls to his mobile phone or respond to an e-mail.

BT shares rose 0.3 percent to 156.5 pence in London trading.

Recovery Plan

BT has appointed Credit Suisse Group AG to manage the sale, the people said. Adam Harper, a Hong Kong-based spokesman at Credit Suisse, declined to comment.

The phone company is waiting for the U.K. pension regulator to review its recovery plan after the watchdog said in February it had “substantial concerns” on an agreement with the trustee of the BT pension program. The pension plan is the U.K.’s largest, and was 7.6 billion pounds ($12 billion) in deficit at the end of last year.

BT has also been in talks with private equity investors, three other people said, without naming the potential buyers. The stake has garnered interest from Providence Equity Partners LLC, Apax Partners LLP and Goldman Sachs Private Equity Group, the Economic Times reported on Oct. 5, citing two unidentified people with knowledge of the talks.

Biswajit A. Subramanian, managing director of Providence Equity in New Delhi, didn’t immediately respond to an e-mail and phone call to his office. Ben Harding, a spokesman for Apax Partners in London, said the fund doesn’t comment on speculation regarding potential investments. Edward Naylor, a spokesman for Goldman Sachs in Hong Kong, declined to comment.