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


Af­ter its exit from the con­sumer mo­bile busi­ness, the Tata group, which had in­vested ~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.

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

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

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.

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 ~7,600 crore in Oc­to­ber 2015. If the val­u­a­tion were the same, Tatas’ 32 per cent hold­ing would be val­ued at ~4,800 crore.

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

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 ~8,000 crore.

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

At the end of March this year, var­i­ous Tata group com­pa­nies led by Tata Sons had made cu­mu­la­tive eq­uity in­vest­ments of ~11,653 cr in TTSL

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