A leading service organization has proposed to raise Rs 2,000 crore through a public tender for a new service delivery company (SDS) that will be set up in Bengaluru.
The new company will be a wholly-owned subsidiary of the government-run Bengaluru-based Tata Teleservices Pvt Ltd (TTPL) and will have an executive director, a board of directors and the ability to operate without government intervention.
The proposal has been submitted to the Department of Electronics, IT, Communications and IT Services (Deest), a ministry department that oversees the private sector in India.
The move comes as Tata Telservices has been accused of abusing its stake in the company by misleading investors about the company’s plans to expand its operations in Bengalore and other parts of the country.
The government has denied any wrongdoing.
The proposed SDS is likely to be set-up in Bengalur in a private company called Reliance Solutions, which Tata Telenservices was formed from in October this year.
The SDS would be set to be a private entity that would be owned by the government.
“This is the first time that a government-owned entity will be able to establish a new SDS and be able operate without any external intervention,” said Rakesh Srinivas, co-founder of the Centre for Information Technology and Public Policy (CITPP), a non-profit group in Bengal, in a statement.
The proposal is also likely to face opposition from a variety of stakeholders, including the public sector undertakings, the media and other private players, said Mr Srinas.
“The government’s own experience of setting up SDSs in other parts in India, such as Tamil Nadu and Maharashtra, shows that such a company is ineffective and often takes money from investors and private sector undertakes.”
The proposal for the new SDD will be submitted in the upcoming budget session of the Bengaluru Municipal Corporation (BMC), which is being led by the city government.
The BMC is also looking at how to revive the sector after a recent slowdown in the sector due to the introduction of an anti-corruption law.
The government has also asked the BMC to appoint a special secretary to oversee the functioning of the SDS, which is expected to be completed by December 2018.
The new company would be called Tata Tel SDS Bengaluru, a nod to the state’s industrial city.
The idea of the new service provider, which has been proposed by the Tata Telerservices management, is to offer online shopping services for its customers through its new entity.
The company has reportedly started selling products through its own website and through Amazon India and Flipkart.
The move could have been taken as early as December 2017, but was delayed by regulatory delays.”TTPL is set to take a 50% stake in SDS in Bengal as part of its plan to expand into other sectors,” the BMC said in a news release.
“TTPL will be the sole beneficiary of this venture.”
In the same statement, the BMC also said it will seek financial assistance from Tata Telcom, the telecoms company, for the SDC’s costs and infrastructure.TTPL had been embroiled in controversy recently after it was accused of illegally buying up stakes in three telecoms companies that were also owned by Tata Telenet, a unit of the Tata Group.
This was after the government had rejected the bid for two of the telecom companies, Tata Telangana and Tata Telessera, which were seeking a licence to offer internet services to Bengaluru’s city.
The Tata group, which owns Telenets and Telesers, also owns Tata Tel and Telangas.