Tata Sons offers guarantee to lenders of telecom arm, will take up AGR dues

Group made the guarantee in September, before the government offered a four-year moratorium to the company.

Tata Sons, the holding company of Tata Group, has submitted a letter of comfort to lenders of Tata Teleservices (TTSL) to meet any obligations of the telecommunications (telecom) company. 

The guarantee to its unlisted subsidiary was given in September just before the Union government decided to offer a four-year moratorium to the company to pay its past adjusted gross revenue (AGR) dues worth Rs 14,000 crore, said a banking source. An email to Tata Sons did not elicit any response.

The firm has already infused about Rs 46,600 crore till June 2019 in TTSL, thus, helping the company repay its debt taken for the roll-out of its mobile telephone services and fund its capital expenditure. The additional burden of AGR will also be paid by Tata Sons after the moratorium ends as the cash and cash equivalents available with the company are low, the source said. 

Tata Teleservices informed the Department of Telecom (DoT) about its decision to opt for deferment of its AGR dues by four years on October 29. It also informed DoT that the decision of converting interest amount in equity will be conveyed within the stipulated time limit of three months of the DoT letter dated October 14, 2021.

TTSL’s capital structure continues to remain highly leveraged with gross bank debt for both TTSL and its listed subsidiary. TTSL Maha­rashtra was Rs 10,800 crore as on March 31.

According to a banking source, the telecom company is changing its business strategy to provide connectivity and communication solutions market for enterprise customers, with services ranging from connectivity, collaboration, Cloud, security, Internet of Things, and marketing solutions. 

This was after the company sold its wireless telephony business to Bharti Airtel for free.

After the demerger of its mobile phone business, TTSL is providing services for its enterprise customers with a fibre optic network running across 132,000 km, with operations in over 60 cities and 1,800 partners. 

For the financial year ended March 2021, the company made a loss of Rs 8,900 crore on operating revenue of Rs 1,605 crore. For the 2020 financial year, the company’s operating revenue was Rs 1,850 crore, while the loss was a monumental Rs 13,325 crore. 

The company was one of the first to enter the mobile telephony business in 1995. 

As of now Tata Sons and its affiliates hold around 95.17 per cent stake in TTSL as on March 31. While most of the telecom companies which shut businesses did not repay their loans, lenders said TTSL paid off all its loans with cash infusion from parent Tata Sons.