British Telecom (BT) is selling around 5 per cent stake in IT services firm Tech Mahindra for about $100 million (Rs556 crore), Reuters yesterday reported, citing two sources with direct knowledge of the situation.

BT, the second-largest stakeholder in Tech Mahindra with 23.2-per cent stake, is selling about 5 per cent for between Rs735 to Rs790 each, a discount of 5 to 12 per cent from Tech Mahindra's Wednesday closing price of Rs834.90, said the report

The London-based £21-billion telecom giant, has been looking to divest its stake in Tech Mahindra since 2008, but had to put its plans on hold following the stock market collapse due to the global recession.

It did sell 5.5 per cent of its holding or 6.9 million shares to Mahindra & Mahindra (M&M) in December 2010 for £63 million.

Several media had last year reported that private equity firms, Carlyle Group and Advent International are in the race to buy BT's entire stake in a little over $500 million deal.

BT and M&M set up a joint venture that became Tech Mahindra in 1986 and since then, the Indian-listed business has grown to gross annual revenues in excess of $1 billion.

Tech Mahindra, part of the $7.1-billion Mahindra Group, is one of the leading communications service providers, and in April 2009 acquired scam tainted Satyam Computers in an all-cash deal. In partnership with BT, the company is focused primarily on the telecommunications industry.

Tech Mahindra's capabilities span a broad spectrum of activities, including business support systems (BSS), operations support systems (OSS), network design and engineering, next generation networks, mobility solutions, security consulting and testing.

Tech Mahindra is currently the fifth largest software house in India.