Tata Sons infuses Rs 2,400 cr in TTSL

The fund infusion comes at a time when Tata Teleservices' net worth has turned negative

Tata Sons, the holding company of the Tata group, has infused Rs 2,400 crore in its unlisted telecom venture Tata Teleservices (TTSL) through convertible preference shares, according to banking sources.

The move comes at a time when TTSL's net worth has turned negative. At the end of 2012-13, the company reported equity capital of Rs 4,712 crore and accumulated losses of Rs 6,575 crore. While net losses stood at Rs 4,858 crore, the turnover was Rs 10,859 crore.

A Tata Sons spokesperson said, "The company does not comment on such issues."

The equity infusion will enable the company to raise further debt from banks. TTSL has debt worth about Rs 26,000 crore. In addition to launching GSM services and setting up network, the operator bought 3G spectrum in nine circles for Rs 5,864 crore.

In March 2009, Japan's NTT DoCoMo acquired 26 per cent stake in TTSL for $2.7 billion (Rs 13,070 crore). The Japanese mobile phone operator has a put option due in March, which it can exercise if it wants to exit the business.

Tata Sons has made TTSL an "associate", changing its earlier status of a subsidiary. Its stake in the company remains unchanged. Tata Sons directly owns 36.17 stake in TTSL, while group firms Tata Communications, Tata Power and Tata Industries own 9.33, 6.97 and 5.46 per cent stakes, respectively. Singapore sovereign fund Temasek owns 6.45 per cent stake in the company, through Aranda Investments.

In 2009, TTSL entered the GSM business with DoCoMo as partner. By introducing rock-bottom rates, it had triggered a rate war. Five years later, subscriber intake has slowed and the company has been recording operational losses.

With 63 million subscribers, it has 5.1 per cent market share, according to latest data by the Telecom Regulatory Authority of India. Only 67 per cent of its subscribers are active on the network.