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Tyco's Sale to Indian Carrier Passes Muster

Tyco's plan to sell its undersea fiber-optic network to an Indian carrier has passed national security muster with U.S. officials.

The sale of the network to Videsh Sanchar Nigam Limited (VSNL) for $130 million does not threaten national security, a U.S. panel ruled.

The approval clears the way for the Indian telecom and broadband service provider to add a high-capacity network that spans 37,000 miles and three continents.

The Committee on Foreign Investment in the United States (CFIUS), which includes Commerce, Defense, Homeland Security and State department officials, notified VSNL of its decision Monday.

"During the course of the past five months, VSNL and Tyco have worked closely with all appropriate regulatory authorities to obtain the necessary approvals to close the transaction in a timely fashion," VSNL said in a statement.

VSNL is part of the Tata Group, an Indian IT and outsourcing giant. In addition to Tyco's network assets, VSNL is also planning to deploy its own network between India and Singapore.

CFIUS members allowed the sale, contingent on VSNL agreeing to certain security guidelines, despite concerns voiced by three Republican senators last week about the Indian government's 26 percent stake in VSNL.

For Tyco's part, the divestiture pares down its business focus and saves money. Tyco, brought low by an accounting scandal in recent years, will keep its telecom systems and supply business, which provides maintenance and undersea cable construction.

A Tyco spokeswoman did not immediately respond to a request for comment.

The VSNL-Tyco sales was the second high-profile decision for CFIUS in as many months. On March 9, the 11-member committee signed off on Lenovo's purchase of IBM's PC operations.

The committee did require some conditions however. Lenovo had to give up access to some of IBM's U.S. government accounts, as well as its vendor status with the U.S. General Services Administration.

Lenovo will also move any IBM staff and operations it acquires from IBM's facilities in Raleigh, North Carolina and into Lenovo's U.S.-based offices.

The concessions came after members of the Department of Homeland Security and the Justice Department raised concerns about a sale and its impact on national security.