MTNL drops plan to acquire Sri Lankan telecom major Suntel
18 May 2009, 1844 Hrs

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Colombo, May 18 The New Delhi-based Mahanagar Telephone Nigam Ltd (MTNL) has pulled out from acquiring a majority stake in Sri Lankan telecom company Suntel, citing legal issues and high liabilities.

MNTL was looking at acquiring a 50 per cent stake and had quoted around 180 million dollars (Rs.900 crore) for doing so, Sri Lankan daily The Nation reports.

"We have decided not to go ahead with our plans to acquire Suntel, as there are a lot of issues. We have also intimated our decision to that company's officials," MTNL Chairman and Managing Director R S P Sinha was quoted, as saying.

MTNL Director (Finance) Anita Soni said: "The company (Suntel) has a lot of uncertainties, including several court cases and financial liabilities. We were not sure which way the company was going, and being a public sector unit (PSU), we could not afford to run into legal issues".

"It was not a viable option and we decided to withdraw our acquisition plans," she said, adding, "the company would look at other opportunities as they come by.""

The Indian telecom service provider had put in a bid to acquire the Colombo-based company, offering fixed-line services, in September 2007.

MTNL was accorded a preferred bidder status in March 2008 and was believed to be the highest bidder, quoting around 180 million dollars.

Nordic telecom company TeliaSonera has a 55 per cent stake in Suntel, while Sri Lanka's Metrocorp, National Development Bank of Sri Lanka, Townsend of Hong Kong and International Finance Corporation hold the remaining stake. (ANI)

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