Live Markets »News & Advice»Company News»Company News Details
Company News Details
Back

Telecom exposure of Tata group stands at Rs 47,000 crore

Krishna Kant & Dev Chatterjee/Mumbai 13 Oct 17 | 01:01 AM

After its exit from the consumer mobile business, the Tata group, which had invested Rs 47,208 crore in the past 15 years through equity and debt, would now have two businesses — enterprise business and retail fixed-line and broadband business. Besides, it would have a 32 per cent stake in Viom Networks. 

Going by the announcement, Bharti Airtel would not take any debt liability of Tata Teleservices (TTSL) and Tata Teleservices (Maharashtra) (TTML), except for a small spectrum payout liability.

Related Stories

    No Related Stories Found
Widgets Magazine

ALSO READ: Bharti gets Tata Tele for nothing; Rs 1,500-cr spectrum payout only cost

At the end of March, various Tata group companies, led by Tata Sons, had made cumulative equity investments worth Rs 11,653 crore, including preference shares, in TTSL. Tatas’ equity investment in TTML stood at Rs 1,466 crore.

TTSL and TTML together had combined debt of Rs 34,089 crore, excluding deferred payment liabilities for spectrum, according to Crisil’s rating rationale dated July 7. 

ALSO READ: How Tata Tele-Bharti Airtel deal was done in 5 days

TTSL had 36.5 per cent stake in TTML at the end of June this year. Other promoters companies, including Tata Sons, own another 38 per cent stake in TTML that is listed on the stock exchange. 

On the asset side, TTSL would be left with a 32 per cent stake in its telecom tower company Viom Networks; its enterprise business and the retail fixed-line and broadband business. 

ALSO READ: Merger with Bharti Airtel gives an easy exit route to Tata Tele: analysts

TTSL has said that it would look at merging its enterprise business with Tata Communications. The company’s retail fixed line and broadband business would be merged with Tata Sky, the group’s direct-to-home TV broadcasting service.  

As far as Viom Networks is concerned, a consortium of investors including Tatas had divested 51 per cent stake in the firm for Rs 7,600 crore in October 2015. If the valuation were the same, Tatas’ 32 per cent holding would be valued at Rs 4,800 crore. 

ALSO READ: Key highlights of Tata Tele-Airtel merger deal

Besides Viom, the group would need to look at the enterprise, fixed-line and broadband businesses, to reduce its losses. There is no information on the valuation of TTSL and TTML’s non-mobile business.

ALSO READ: Tata Tele-Bharti Airtel deal will help stress resolution, say lenders

The Tatas entered the telecom industry as soon as the sector was opened up for private investment during the 1990s. After differences erupted with its then equity partners, AT&T and the Aditya Birla group, the Tata group decided to enter the sector on its own and sold their stake in Idea Cellular to the Birlas. 

The second innings of the Tatas in the telecom sector has not been a success. In 2009, the Tatas brought in NTT DoCoMo as a partner and sold 26.5 per cent stake for close to $2.4 billion. Later, as TTSL failed to meet its financial milestones, DoCoMo decided to exit the company in 2014. After a prolonged court battle, the Tatas decided to settle all pending issues with DoCoMo early this year, and agreed to buy back TTSL shares by paying Rs 8,000 crore.

ALSO READ: How Tatas made the wrong calls in telecom

Soon after he was removed as Tata group chairman, Cyrus Mistry had warned that if the group exits telecom, it would end up with write-downs worth $4-5 billion, apart from paying $1.2 billion to DoCoMo.

Widgets Magazine

Sensex

Company Price Gain (%)
M & M1,522.852.71
Cipla590.352.51
Sun Pharma.Inds.528.852.06
St Bk of India318.901.97
Wipro295.301.90

Poll

Currently No Poll Available.

Online Portfolio

You can create Online Portfolio here using the below button.

Widgets Magazine