Tata Sons may dissolve Teleservices unit

By:
Natalie Bannerman
Published on:

Tata Group chairman, N Chandrasekaran, is considering closing the telecoms services arm of the business due to increasing debt

Tata Sons the owner of Tata Teleservices is considering winding down the mobile services business making it the first Tata subsidiary to be closed after 149 years. 

With a consolidated debt of over $5.2 billion, N Chandrasekaran, the Tata Group chairman, has said that fixing the debt incurred by the business has been top of his list of priorities since entering the role.

After NTT DoCoMo exited the equity shareholding in Tata Teleservices in March 2014, the company has been struggling to find a replacement business partner since then.  NTT DoCoMo left due to the declining value of its 26% stake in the business and Tata Sons agreed to pay the former partner close to $1.6 million for the damages. The total debt for the 25 Tata listed companies is somewhere in excess of $25 billion as of March 2017.

Tata Son has had several discussions with other telcos to buy Tata Tele but nothing solid has materialised as a result. In addition, there have been reports of Tata Teleservices eyeing a merger with R-Comm-Aircel-MTS, behind Vodafone India and Bharati Airtel.

Much of the decline of the business has been attributed to the growing pressure from new entrants like Reliance Jio who are thriving in the market. In only May of this year the company made 500-600 people redundant in an attempt to make savings. 

According to a report by the Busines Standard, the parent company in July of this year attempted to save the fledging business by investing $1.8 billion, but may have to resort to selling spectrum and other non-core businesses in order to reduce its debt.