BT confirms sale of majority of Tech Mahindra stake

Telco BT has announced it has sold two-thirds of its stake in Indian services company Tech Mahindra, ahead of the outsourcer's planned merger.

BT has confirmed it has offloaded the majority of its stake in Indian outsourcer Tech Mahindra.

The telco said on Thursday that it had sold shares equivalent to 14.1 percent of Tech Mahindra for INR 13.949bn (£158.6m), or INR 777.73 (£8.85) per share.

The sale was larger than market watchers initially predicted: rumours of a sell-off, which first surfaced on Wednesday , said BT would divest itself of five percent. 

BT still holds a 9.1-percent shareholding in Tech Mahindra. The outsourcer "remains a key supplier to BT", according to the telco.

BT's decision to pull back from a partnership that started over 30 years ago caused Tech Mahindra's share price fall by over five percent.

"The JV [joint venture], which started life in 1986 as Mahindra BT still depends on BT for 36 percent of its revenues, though five years ago it was around two-thirds. BT has not ruled out further dilution. Indeed this will in effect automatically happen when the Tech Mahindra share-swap based merger with sibling Mahindra Satyam is finally executed," Anthony Miller, managing partner at analyst house TechMarketView, said.

The merger between Tech Mahindra and Mahindra Satyam was announced in March 2012 , and is expected to close before the end of the year.

Tech Mahindra was reported earlier this week to be interested in buying Comviva Technologies from the Bharti conglomerate for INR 7.5 billion (£85m).

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