Google, Amazon Tussle For Tata Communications’ Data Centre Business

Google and Amazon are among those looking to buy India’s Tata Communications’ data centre division in a deal that could be worth $650-$700 million (£414-£446m).

Shares in Tata Communications rocketed four percent last night as India’s Economic Times cited sources that have knowledge of the matter.

Emerging cloud market

Google and Amazon could now be locked in a vicious battle that would secure the winner prime real estate in a data centre cloud market they are both competing for.

If a sale goes through, Tata Communications will be able to reduce its data centre debt and focus on its data carrier business, rather than data centres. The firm currently has a net debt of £890 million.

Tata Communications already has data centres in the US, UK and Singapore, and is located in most major cities in India.

But Amazon and Google will have to fight with other circling vultures. Potential buyers also include private equity giants Carlyle, Blackstones Group, KKR, and Bain Capital.

The winning bidder will end up purchasing a 74 percent stake in Tata Communication’s data centre business, with Tata still retaining a minority stake.

TechWeekEurope has contacted both Google and Amazon for comment, but has not yet received a reply at the time of publishing.

In June, Amazon revealed plans to open its own data centres in India, confirming that the region will be its twelfth region globally. The data centres, which will run Amazon’s cloud computing platform AWS, will open in 2016.

Amazon already has some big names as customers in India. Indian giants such as Tata Motors and Jubilant Food Works use AWS to power their computing for millions of their own customers.

Last year, Microsoft revealed its own plans to build Azure data centres in India, which should open by the end of this year.

India has one of the fastest growing cloud computing markets, with public cloud services revenue in the country set to reach $838 million (£534m) by the end of 2015, an increase of almost 33 percent over 2014’s revenue, according to research house Gartner.

Gartner further predicts high rates of spending on cloud services in India to continue through 2018 when the market is expected to reach $1.9 billion (£1.21bn).

“Organisations in India seeking IT outsourcing services are increasingly turning to public cloud services as an alternative to traditional ITO offerings,” said Ed Anderson, research vice president at Gartner. “In fact, cloud services are not only being used for low-value or transient workloads but also increasingly for production workloads, including some mission-critical initiatives.”

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