Tata Sons to invest ~30k cr more in Tata Teleservices
Funds will be used to retire debt, pay spectrum fees
Tata Sons will pump in ~30,000 crore more into its money-losing telecom company, Tata Teleservices, by way of quasi-equity and/or inter-corporate loan in the current financial year. The additional funds will be used by Tata Teleservices to repay its ~31,000 crore debts and pay spectrum fees.
TataSons, the holding company of the $105-billion Tata group, will pump ~30,000 crore more into its money-losing telecom company, Tata Teleservices, by way of quasi-equity and/ or inter corporate loan in the current financial year.
The additional funds will be used by Tata Teleservices to repay its ~31,000-crore debts and pay spectrum fees. Tata Teleservices had on October 12 agreed to merge its consumer mobile business with Bharti Airtel on a cash-free and debtfree basis. It was also considering merging its enterprise business with Tata Communications and the broadband and fixed-line retail business with Tata Sky, apart from retaining its 32 per cent stake in Viom Networks, a cellphone tower company.
Soon after the merger was announced, executives at Tata Sons had made it clear that Tata Teleservices would not force its bankers to take a haircut and that it would remain an AAA-rated company.
In a meeting held on Thursday, the unlisted Tata Teleservices’ board approved raising of additional funds by issuing a combination of instruments, including option ally convertible preference shares, compulsory convertible preference shares, optionally convertible debentures and equity shares, in one or more tranches to its promoter Tata Sons. The fundraising will be subject to shareholders clearing the proposal in an extraordinary general meeting to be called soon, according to a banker privy to the plans. A Tata Sons spokesperson declined to comment on the developments.
The additional funding by Tata Sons comes at a time when its net profit declined by 72.4 per cent to ~832 crore in 2016-17. In the same financial year, the holding company took a hit of ~4,000 crore following NTT DoCoMo exercising its option to sell its 26 per cent stake in Tata Teleservices. But Tata Sons revenues were up 23.2 per cent to ~9,984 crore from ~ 8,104 crore, boosted mainly by other income received from the sale of its 24 per cent stake in its insurance venture, Tata AIA Insurance.
Bankers said it would not be a problem for Tata Sons to raise funds keeping in mind its 73.5 per cent stake in its profit churning venture TCS, which had a market value of ~4.93 lakh crore on Friday.
In a separate notice to the stock exchanges, Tata Teleservices listed subsidiary, Tata Teleservices Maharashtra, sent a notice to its shareholders for a postal ballot to raise its borrowing limit to ~20,000 crore from ~15,000 crore.