Tata Communications' Singapore-based wholly owned subsidiary Tata Communications International Pte Ltd has signed an agreement with the shareholders of  China Enterprise Communications Limited (China Entercom / CEC) to acquire a 50-per cent equity stake in the Chinese firm.

This is a first-of-its-kind agreement in the Chinese telecom sector after China joined the WTO. The joint venture requires approvals from the Chinese government and regulators.

"The strategic cooperation between China Enterprise Communications Ltd. and Tata Communications was carried out under the background of economic globalisation, and the fact that China and India are driving the 21st century world economy," said Zhu Jianhua, president and CEO of China Enterprise Communications Limited.

"Through the cooperation with Tata Communications, we will focus on the development of the domestic market to provide high quality networking service to multinational enterprises in China as well as China's domestic enterprises. We intend to grow the strength of the China Enterprise Communications brand," Jianhua added.

As one of the value-added communication solution providers, China Entercom has a strong financial and regulatory background due to its major shareholders being China International Trust and Investment Corporation Group (CITIC) and State-owned Assets Supervision and Administration Commission (SASAC).

CEC was recently awarded a nationwide IP-VPN service license by China's ministry of information industry (MII), the first telecom valued-added service license granted to a non-facilities based service provider. It has network reach throughout China, with no regional restrictions on its service capabilities. CEC provides VPN connectivity reach into 347 cities in China, including a dual-pop presence in tier-one cities like Beijing, Shanghai, Guangzhou and Shenzhen. This reach complements Tata Communications' VPN presence in 120 Indian cities and 19 other major business capitals in North America, Europe and Asia.

Having full licenses covering IP VPN, ISP, call centre, on-line transaction and multi-communication service operations, CEC provides a wide range of telecom services and IT solutions based on our nationwide IP VPN network, "CENet". CEC also integrates its own network with China Express One which is now held by CITIC Group, to provide value-added services and end-to-end managed services to enterprises throughout the regions.

CEC's headquarter is located in Beijing with Chinese regional branch offices in Shanghai, Shenzhen and Guangzhou. With the increase in CEC's international partner business, a subsidiary company for both sales and operations has been established in Hong Kong. CEC has a fully functional 24x7 network operation centre in Beijing, with also customer service centers located in other major provincial cities namely Dalian, Qingdao, Ningbo and Xiamen.

"Tata Communications is honoured to have this unique opportunity to establish an EJV (equity joint venture) with the shareholders of CEC and to become one of the first global telecom companies to attain this type of access to the Chinese market," said Vinod Kumar, president, data and mobility services, Tata Communications. "This is an innovative step in our ongoing effort to enable connectivity and managed services across strategic regions and emerging markets that are of high value to our global customers."

Yankee Group's Camille Mendler, vice president,  enterprise research group, described the signing of the agreement as a "historic investment."

"Not only does it allow for the delivery of unprecedented reach into China and India for global enterprises, it also confirms Tata Communications' leading position in service delivery to emerging markets," Mendler said

CEC is majority owned by CITIC (China International Trust and Investment Corporation); other investors of CEC include SASAC and CE-SCM. Tata Communications' investment in CEC is subject to various closing conditions as well as approvals from and the relevant Chinese governmental and regulatory bodies, including but not limited to the MII and the Ministry of Commerce.

Tata Communications, a part of the $29 billion Tata Group, became the unified global brand for VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit and CIPRIS on February 13, 2008. Its portfolio includes transmission, IP, converged voice, mobility, managed network connectivity, hosted data center, communications solutions and business transformation services to global and Indian enterprises and service providers as well as, broadband and content services to Indian consumers.

The Tata Global Network encompasses one of the most advanced and largest submarine cable networks, a Tier-1 IP network, connectivity to more than 200 countries across 300 PoPs and more than one million square feet data center space. Tata Communications has a presence in 80 cities in 40 countries worldwide. Tata Communications has a strategic investment in South African operator Neotel, providing the company with a strong anchor to build an African footprint.

The number one global international wholesale voice operator and number one provider of International Long Distance, Enterprise Data and Internet Services in India, the company was named "Best Wholesale Carrier" at the World Communications Awards in 2006 and was named the "Best Pan-Asian Wholesale Provider" at the 2007 Capacity Magazine Global Wholesale Telecommunications Awards for the second consecutive year.