We save ₹8,000-9,000 cr from the deal: Tata Sons CFO
After two decades of being in business, Tata Teleservices has finally called it a day by giving its mobile business to Airtel. Its fixed line and broadband business has been offered to Tata Sky, while the enterprise business has been offered to Tata Communications. while the deal looks good for Airtel, Tatas do not get any cash from the agreement. The big issue of how the company will pay of its huge debt is still a question. BusinessLine met Saurabh Agrawal, Group Chief Financial Officer, Tata Sons Ltd, to know how the deal benefits the company.
OYou have given all your spectrum and subscribers to Airtel for zero cash. What is in it for the Tata group?
This deal is great for Tata group because we get to keep what we like. We have a lovely enterprise business which we have offered to Tata Communications. If they decide to take it, it makes us one of the largest players in this space. In Tata Sky, we end up retaining the broadband and fixed line units.
Tata Sky wanted to get into the broadband space. It has the option to start greenfield but this offers an option to start on a small scale and then they can scale it up. Problem was always the consumer space. Their the option was to shut it down as it was not sustainable or we had to find some other solution.
We spoke to all the industry players and they were very helpful by offering solutions. But finally we thought that the business fitted well with Airtel. We wanted to find a solution for all our stakeholders — customers, employees, vendors, dealers. The fact that we are not closing down, it is a huge satisfaction for the Group that the interest of our stakeholders will be protected through this deal. Through the Airtel deal, I am saving ₹8,000-9,000 crore compared to if we had shut shown. So, it’s huge gain.
How would you save that much money?
When you close down a large business spread across the country, it would lead to costs. No one has done anything like that. There would have been liabilities. This would have been costly affair. Plus this leaves me with the enterprise, fixed line and tower assets which we can monetise to take care of the debt. Of course, it will need the support of Tata Sons, which we will provide to take care of all liabilities of the banks. We do not want any haircuts from the banks.
We had offered to everyone. For us, it was important to have a clean deal.
Reliance Jio had also offered a construct. For us, it was important to get certainty and Airtel offered that. Airtel will also help us minimise liabilities.
Any regulatory hurdles?
I see zero regulatory hurdles. In some circles, we may exceed certain caps but with RJio coming in that will change the market share over the next few months.
But it really does not address the debt on Tata Tele’s books?
Yes, it does not. We are gulping the poison. Once we arrive at the valuation of our fixed line, broadband and enterprise business and see what Tata Comm and Tata Sky will give then we will see what the gap is. This will take 5-6 weeks. Whatever is required the group will put in the rest.
What do you think went wrong for Tata Tele?
It is difficult on any one point. There are multiple things that add up. It would be wrong for me to say now why some decisions were taken back then. There must have been other compulsions.
We are where we are and we have taken this decision today. It’s a great deal for Airtel, it’s a great deal for Tata. I can sleep well tonight.
What’s the future for Tata Comm?
We are very bullish about it. Its a good business to be.
How much of pressure did RJio create for you to do this deal now?
Even without RJio this deal made sense. The mobile business has been a dead horse for a while now. We lost the positioning in the market.
What about $1.7 billion payable to NTT DoCoMo?
The issue has been resolved. We are going to close that soon.
“We are not closing down, it is a huge satisfaction for the Group that the interest of our stakeholders will be protected through this deal.”