Tata Teleservices seeks debt recast
Firm wants ~29,000-cr loan tenure raised to 20 years
Tata Teleservices, the loss-making telecom services provider of the Tata group, had asked banks to restructure loans worth ~29,000 crore following a ~11,650 crore erosion in its net worth in 2016-17, banking sources said.
Tata Teleservices joins Anil Ambani-owned Reliance Communications in seeking a bailout from banks since the launch of services by Reliance Jio.
According to bankers, Tata Teleservices and its listed subsidiary Tata Teleservices (Maharashtra) have asked banks to extend the maturity of loans to 20 years in line with the tenure of their licences and spectrum. Besides, Tata Teleservices has sought a loan of ~5,000 crore to bridge its cash flow and meet capital expenditure.
Tata Teleservices reported a net loss of ~2,839 crore in 2016-17, bigger than its loss of ~2,023 crore in the previous year. Promoter Tata Sons has invested ~6,500 crore as quasi-equity in the last three years so that Tata Teleservices can meet its liabilities to banks.
Tata Teleservices had started showing signs of a revival in the first half of 2016-17, but the launch of free services by Reliance Jio from October pushed the company back into bigger losses.
The Tata Teleservices spokesperson declined to comment on the matter of the loan recast.
The Tata group company’s turnover declined to ~9,666 crore in 2016-17 from ~10,708 crore in the previous year. Bankers said Tata Teleservices’ promoters would have to keep investing in its equity to meet liabilities.
Tata Teleservices is not the only telecom company that struggled during 2016-17. The Aditya Birla group’s Idea Cellular posted a loss of ~400 crore in 2016-17 against a ~2,728 crore profit in 2015-16. Sales and profits of the top two players, Bharti Airtel and Vodafone, also declined during the year.
Infosys had commissioned Gibson Dunn & Crutcher to investigate the charges, which interviewed over 50 witnesses and went through mails, documents and public records. “We found no evidence supporting the whistleblower’s allegations regarding the acquisitions – there were no conflicts of interest or kickbacks, required approvals for the acquisitions were obtained, thorough due diligence was conducted, the valuations of the target companies done by an outside financial advisor were reasonable, and the purchase prices were within the range of values determined by that advisor,” Gibson Dunn & Crutcher stated in its report to the audit committee of the Infosys board.
Infosys acquired Panaya on February 16, 2015, for $200 million and valued the company at a 25 per cent premium over the $162 million arrived at by Series E investors one month before the deal. Panaya was struggling to raise money and employees were leaving the company, the complainant wrote in the letter.
“The Indian law firm Khaitan & Company was appointed to provide legal counsel on Indian law matters associated with the anonymous complaint, independent investigation and related matters. The auditors of the company performed select procedures related to the independent investigation as part the audit for the year ended March 31, 2017,” said Infosys in a statement.
The company informed the Securities and Exchange Board of India about the findings of the investigation. Following Murthy’s accusations, Infosys has included DN Prahlad on the board and elevated Ravi Venkatesan as co-chairman and strengthened disclosure norms.