Equity groups lining up for BT's share of Tech Mahindra

BT is allegedly considering selling its stake in the Indian software provider

Former chairman Ramalinga Raju's fraud still affects Mahindra Satyam

Several private equity groups are in talks with BT about buying its 31 per cent stake in Indian software provider Tech Mahindra.

The Financial Times states that the deal could be worth up to $800m (£506m).

The groups in question are Apax Partners, Providence Equity and Goldman Sachs Private Equity, according to the FT.

Ian Marriott, research vice president at analyst Gartner, said: "It has been a difficult time for many telcos recently, so it could be that BT is looking to release some funds to transfer into other investments."

When asked about the proposed deal, a BT spokesman explained that the organisation will continue to maintain its presence in India, but refused to confirm or deny the reports.

"BT has operations and investments worldwide which we regularly review," he said. "India remains a critical market both for BT and our customers, and we expect to continue developing both the operational network and service presence that we have established over a number of years."

Last year Tech Mahindra bought IT consulting firm Satyam, which is still recovering from the fraud of former chairman Ramalinga Raju.

Satyam has lost several key members of its senior staff in recent months and recently announced a £228m fall in revenue in the past year. The company also delisted from the New York Stock Exchange as it was unable to comply with reporting requirements as a result of the Raju scandal.

But Marriott believes that the next 12 months could see a change in Satyam's fortunes.

"If Satyam is able to hold on to their accounts, by 2011 they should be in a position to put this behind them and re-establish themselves as a top player in India. They have the financial wherewithal to do that with Tech Mahindra," he said.

Neither Tech Mahindra nor Mahindra Satyam were available for comment.