Tata Sons to infuse Rs 2,000 crore in loss-making subsidiary Tata Tele

For the first half of the ongoing financial year, the company reported a loss of Rs 672 crore on total income of Rs 1,046 crore, according to filings with the stock exchanges

2 min read Last Updated : Oct 26 2023 | 10:57 PM IST

Tata Sons, the holding company of the Tata group, will have to infuse an additional Rs 2,055 crore in its loss-making subsidiary Tata Teleservices as the latter's bonds worth Rs 940 crore are due for repayment on November 10. Another tranche of bonds worth Rs 1,115 crore are due by February next year, say banking sources.

Bankers say since Tata Teleservices does not have enough financial resources, Tata Sons will have to chip in these funds so the company can meet its financial obligations.

Tata Sons has already repaid Rs 46,000 crore worth of debt to date of Tata Teleservices in the past few years. In 2018, Tata Sons had also paid $1.27 billion to NTT Docomo to buy back 26 per cent in the group telecom venture Tata Teleservices after the Japanese telecom giant exercised its right to exit the joint venture.

For the first half of the ongoing financial year, the company reported a loss of Rs 672 crore on total income of Rs 1,046 crore, according to filings with the stock exchanges. The company’s net worth was negative Rs 17,832 crore as on September this year.

An email sent to Tata Sons did not elicit any response. Bankers said Tata Teleservices has obtained a support letter from its holding company indicating it will take necessary financial action to organise any shortfall in liquidity.

Interestingly, Tata Teleservices, one of the first companies to start wireless telephone services in India, has become a cash burner for the salt-to-software group. In its annual report for 2022, Tata Sons had pegged the gross liabilities of Tata Teleservices and its listed subsidiary, Tata Tele Maharashtra, at Rs 19,638 crore, with the company owing the government an adjusted gross revenue (AGR).

On October 20, the company filed a curative petition in the Supreme Court to reconsider the levy of interest, and penalty and interest on the penalty claiming errors in calculations by the department of telecommunications and a review petition is pending with the Supreme Court. The matter is pending.