We save ₹8,000-9,000 cr from the deal: Tata Sons CFO

The Hindu Business Line - - IT & TELECOM - THOMAS K THOMAS

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.

Why Air­tel?

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.

YZ SAU­RABH AGRAWAL YZ

“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.”

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