As on March 31, 2017, the combined debt of Tata Teleservices and its listed subsidiary Tata Tele Maharashtra stood at Rs 34,089 crore, excluding deferred payment liabilities worth almost Rs 8,000 crore to the Indian government for spectrum. The fund infusion was necessary as Tata Teleservices’ net worth eroded by over Rs 11,650 crore following an aggressive six-month free voice and data plan offered by Reliance Jio.
Analysts said the operating performance of all telecom companies
was expected to remain weak due to intensifying competition in the sector. However, Tata Sons is likely to provide timely support for debt servicing and funding operating losses as in the past, said an analyst.
E-mail queries sent to Tata Teleservices and Tata Sons remained unanswered.
Tata Tele announced a loss of Rs 2,839 crore for FY17, compared to a loss of Rs 2,023 crore in the previous year. It also reported a decline in turnover from Rs 10,708 crore in FY16 to Rs 9,667 crore in FY17.
Analysts said with lower interest costs, Tata Teleservices would be in a better position to merge its operations with a rival. No buyer would be interested in taking over a company which has huge financial liabilities to banks, they pointed out.
While the parent company would invest more equity, bankers said the company had also asked banks to extend the maturity of its loans to 20 years in line with the tenure of its licences and spectrum. Besides, Tata Teleservices has sought a loan of Rs 5,000 crore to meet its capital expenditure.
The company is also planning to sell its stake in telecom
tower company Viom Networks to bring down its debt. If this entire plan is successfully implemented, Tata Teleservices would perhaps manage to get out of its financial crisis, according to analysts.