Tech Mahindra boosts revenue with $87m Hutch buy

"It is in this area that we had a vacuum of sorts. Basically, all telecoms are looking to enhance customer-care. Hutch has done pioneering work in this area and obviously when this entity came up for sale we were interested because it completes our offering of services. We have been providing services to Hutchinson and set up and operated their unit in Indonesia and Australia. We have just been awarded a contract for the same services in UK for Hutchinson’s franchise called 3," explains Nayyar.

However, Nayyar clarified that the UK contract is not part of this deal. The UK contract, he adds, is fairly large and would be over a period of five years and is worth over USD 100 billion.

CFO Sonjoy Anand breaks up the benefit that will accrue each quarter from the revenue commitment of USD 850 million spread over five years. "The revenue commitment is USD 850 million over a five year period. The annualised run-rate of the business is around USD 160 million. It is just short of a month's revenue in this quarter and a full quarter's revenue in the next quarter."

Anand explains that the company will comply with the current tax laws that are applicable to any deals made out of Mauritius wherein the buyer ends up paying withholding tax. "The tax laws impact our transaction in a number of areas- on operations areas and transaction-related segments. As far as the transaction related areas are concerned, there are some issues regarding interpretation that fall in need to be taken care of by us and Hutch. I cannot be very specific except to assure you that we have taken the best advice and we are going to make sure that we will be compliant with all the laws."