TATAS’ JINX WITH TELE­COM

Financial Chronicle - - FRONT PAGE - AN­JANA DAS New Delhi

TATAS’ deal with Air­tel to sell the con­sumer mo­bile busi­ness marks the end of the $104 bil­lion group’s 21 tu­mul­tuous years in tele­com. Tata Sons chairman N Chan­drasekaran had ear­lier said that Tata Te­le­ser­vices was in a really bad shape on the back of huge debt and monthly cash losses. He had in­di­cated that its turn­around was an ex­tremely dif­fi­cult task.

The fail­ure in the tele­com busi­ness had dogged Tatas. Tata Te­le­ser­vices ini­tially of­fered tele­com ser­vices on CDMA plat­form, which wasn’t a roar­ing suc­cess. It switched to GSM plat­form when Ja­pan’s NTT Do­CoMo came as a strate­gic part­ner with 26 per cent stake, pay­ing Rs 14,000 crore. It was the first tele­com com­pany to in­tro­duce per sec­ond billing, a great con­sumer cen­tric move, and the first one to of­fer 3G ser­vices. After a bit­ter bat­tle, Do­CoMo ex­ited the ven­ture in 2014.

AS part of its larger re­struc­tur­ing strat­egy fo­cus­ing on strength­en­ing core op­er­a­tions in steel, soft­ware and au­to­mo­biles, the salt-tosoft­ware group may exit non-core op­er­a­tions, sources said. Tatas have al­ready merged their debt-rid­den Euro­pean steel op­er­a­tions with Ger­man ma­jor Thyssenkrupp. Tatas are also look­ing at di­vest­ing drug dis­cov­ery ser­vices com­pany Ad­v­i­nus Ther­a­peu­tics.

In­dus­try sources said ul­ti­mately Tatas as part of their strat­egy will exit the non­core busi­ness in­volv­ing tele­com, over­seas ca­ble and en­ter­prise ser­vices, and DTH busi­nesses.

Chan­drasekaran, who took the Tata Sons helm in Jan­uary fol­low­ing a feud be­tween Ratan Tata and Cyrus Mistry, is cap­ping cap­i­tal ex­po­sure in Tata Ce­ram­ics, Tata Busi­ness Sup­port Ser­vices, Tata As­set Man­age­ment, Tata Au­to­comp Sys­tems and Tata Chem­i­cals' fer­til­izer unit. At the same time, he is in­creas­ing in­vest­ments in high growth and in­dus­try lead­ing busi­nesses.

With re­gard to Tata Te­le­ser­vices, the trig­gers for exit were sus­tained mar­ket share loss, lack of high-speed spec­trum and ex­tremely poor fi­nan­cials.

Prior to the exit, Tata Te­le­ser­vices had in­formed the Depart­ment of Tele­com about its de­ci­sion and trans­fer spec­trum through a deal to Air­tel. The tele­com arms in­clude the listed Tata Te­le­ser­vices (Ma­ha­rash­tra) Ltd., which pro­vides mo­bile ser­vices in Mum­bai, Ma­ha­rash­tra and Goa cir­cles. Tata Sons also owns 37 per cent in TTML. The group re­tained the en­ter­prise busi­ness, bo­rad­band and wire­line op­er­a­tions.

Trai fig­ures sug­gested the com­pany has been los­ing cus­tomers. Tata Te­le­ser­vices holds about 180 mega­hertz (MHz) across three bands, some of them un­der the ad­min­is­tered regime al­lo­cated with­out bid­ding.

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