India's Tata group announced on Tuesday it is buying a 26 percent stake in InfraCo, a new South Africa-based telecommunications company.

InfraCo offers long distance telephone services, builds and operates marine telecom infrastructure. InfraCo needs an initial investment of $350-million to begin operations. The Tata group will contribute $60-million through its international telecom provider Videsh Sanchar Nigam Ltd., the newspaper said, quoting unnamed sources.

The South African government is said to be contributing $225 million and the remaining $65-million will be funded through debt.

The deal is Tata group's second telecom venture in South Africa. The first venture involved commercial vehicles in 1997 and is now a powerful force in South Africa's trucking industry.

The Tata Group is one of India's largest business conglomerates, with revenues in 2004-05 of $17.8 billion, the equivalent of about 2.8 per cent of the country's GDP.

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