MUMBAI, INDIA: Tata Communications (formerly VSNL) has entered into an agreement with Beijing-based telecom and IT services firm China Enterprise Communications (CEC) to acquire 50 per cent stake in that company.

The financials of the transactions, however, were not disclosed.

Under the agreement, which is subject to regulatory approvals, both the companies aim to offer networking services to firms in China.

"The proposed investment in CEC will help Tata Communications to have a direct presence in a growing Chinese market. Telecom companies world over are eager to enter emerging markets in China and India," Tata Communications senior vice president (Corporate Strategy) Srinivasa Addepalli said.

Tata Communications had earlier entered into a network-to-network interface (NNI) agreement with CEC, which interconnected the two companies' multi-protocol label switching (MPLS) infrastructures.

CEC provides VPN (virtual private network) connectivity to 347 cities in China, including dual points of presence in major cities like Beijing, Shanghai, Guangzhou and Shenzhen.

It holds a nationwide IP-VPN service license from China's Ministry of Information Industry (MII). Tata Communications in turn has VPN presence in 120 Indian cities and 19 major business centers in North America, Europe and Asia.

Indian telecom companies have been expanding outside India, buying up submarine cable capacity, services capability, and access to customers. For example, Reliance Communications is in talks with MTN Group of South Africa for a merger.

Tata Communications said it is looking at setting up presences in emerging markets across the world and China is one of the most important markets where telecom companies want to get into. With this agreement, it hopes to provide services in China, jointly with CEC.

CEC has licences for operating Internet Protocol Virtual Private Network (IP-VPN), Internet Service Provider (ISP), call center, online transaction and multi-communication service operations. It employs around 120 personnel and has 19 points-of-presence (PoP) in that country.

Tata Communications, in turn, has VPN presence in 120 Indian cities and 19 major business centers in North America, Europe and Asia.

China International Trust and Investment Corporation owns a majority stake in CEC, while other investors include SASAC and the management team of the Chinese company.

Tata Communications made the acquisition through its wholly owned subsidiary, Tata Communications International Pte.