After its exit from the consumer mobile business, the Tata group, which had invested Rs 47,208 crore in the past 15 years through equity and debt, would now have two businesses — enterprise business and retail fixed-line and broadband business. Besides, it would have a 32 per cent stake in Viom Networks.
Going by the announcement, Bharti Airtel would not take any debt liability of Tata Teleservices
(TTSL) and Tata Teleservices
(Maharashtra) (TTML), except for a small spectrum payout liability.
At the end of March, various Tata group
companies, led by Tata Sons, had made cumulative equity investments worth Rs 11,653 crore, including preference shares, in TTSL.
Tatas’ equity investment in TTML
stood at Rs 1,466 crore.
had 36.5 per cent stake in TTML
at the end of June this year. Other promoters companies, including Tata Sons, own another 38 per cent stake in TTML
that is listed on the stock exchange.
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On the asset side, TTSL
would be left with a 32 per cent stake in its telecom tower company Viom Networks; its enterprise business and the retail fixed-line and broadband business.
has said that it would look at merging its enterprise business with Tata Communications. The company’s retail fixed line and broadband business would be merged with Tata Sky, the group’s direct-to-home TV broadcasting service.
As far as Viom Networks is concerned, a consortium of investors including Tatas had divested 51 per cent stake in the firm for Rs 7,600 crore in October 2015. If the valuation were the same, Tatas’ 32 per cent holding would be valued at Rs 4,800 crore.
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The Tatas entered the telecom industry as soon as the sector was opened up for private investment during the 1990s. After differences erupted with its then equity partners, AT&T and the Aditya Birla group, the Tata group
decided to enter the sector on its own and sold their stake in Idea Cellular to the Birlas.
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The second innings of the Tatas in the telecom sector
has not been a success. In 2009, the Tatas brought in NTT DoCoMo as a partner and sold 26.5 per cent stake for close to $2.4 billion. Later, as TTSL
failed to meet its financial milestones, DoCoMo decided to exit the company in 2014. After a prolonged court battle, the Tatas decided to settle all pending issues with DoCoMo early this year, and agreed to buy back TTSL
shares by paying Rs 8,000 crore.
Soon after he was removed as Tata group
chairman, Cyrus Mistry had warned that if the group exits telecom, it would end up with write-downs worth $4-5 billion, apart from paying $1.2 billion to DoCoMo.