Tata Tele arm breaches financial covenants

Loans of ~1,600 cr could be recalled

BSE-listed Tata Teleservices (Maharashtra) or TTML — a subsidiary of Tata Teleservices Limited (TTSL) — on Tuesday said loans worth ~1,600 crore could be recalled by lenders as it failed to meet financial covenants.

In a filing to the stock exchanges, TTML said its accumulated losses as on September 30 had exceeded its paid-up capital and reserves, and it had not been able to satisfy financial covenants stated in agreements with lenders of long-term rupee loans and external commercial borrowings. “This may result in loans of ~1,602.86 crore being recalled by lenders,” it said.

The company said it had applied for a waiver for the testing of financial covenants, which was under consideration by the lenders.

TTML also reported an exceptional loss of ~7,709 crore in the second quarter due to impairment on its consumer mobile business.

The company also reported a record net loss of ~8,198 crore on total income of ~516 crore. The company has a ~14,400crore debt, as of March this year.

The company has decided to sell its consumer mobile phone business to Bharti Airtel for free in October this year, which was bleeding both TTML and its parent TTSL for the past few years. Thanks to the launch of Reliance Jio, players such as Tata Teleservices found it difficult to take on the competition and decided to shut shops.

Besides Tata Sons, the holding company of Tata Teleservices would infuse further funds in the company, the firm said. And added that it plans to sell some assets to repay lenders.

Tata Sons has said it would infuse ~30,000 crore into Tata Teleservices which would be used by both TTSL and its subsidiary TTML to repay the debt.