Loss-making Tata Teleservices has revamped its board, with Tata group nominees Kishor Chaukar and N Chandrasekaran and NTT Docomo nominee Seiichi Ikeda resigning as directors.
The company inducted three independent directors on its board - State Bank of India Deputy Managing Director Bharati Rao, member of the erstwhile Planning Commission N Jadhav, and marketing expert Vibha Paul Rishi - effective March 30.
The company's board is chaired by Tata group chairman Cyrus Mistry.
Last year, former managing director of Tata Industries, Chaukar; Tata Consultancy Services managing director and chief executive Chandrasekaran; and Ikeda were re-appointed directors for five years. Their sudden exit has fuelled speculation that Tata's merger talks with Norwegian telecom giant Telenor's Indian subsidiary are now in the final stage. Bankers say the merger is likely to be announced soon after the government comes out with telecom merger and acquisition guidelines this month. "This will be beneficial for all stakeholders, including banks, which have lent huge money to the company," said a banker.
When contacted, a company spokesperson said the changes on the board were aimed at meeting the statutory requirement of having at least one woman director and independent directors accounting for at least a third of the board.
Inputs from institutional nominee and independent directors are expected to boost the company, which has been losing money since it was set up in 1996. For the nine months ended December 2014, Tata Teleservices reported a net loss of Rs 2,940 crore on an operating income of Rs 8,180 crore, against a net loss of Rs 3,490 crore on an operating income of Rs 7,900 crore for the year-ago period.
The Tata group is in arbitration with Docomo. Last year, Docomo had exercised its option to exit Tata Teleservices, at 50 per cent of its acquisition cost.
Though the Tatas have agreed to buy out Docomo 's stake at a pre-determined valuation, its application to the Reserve Bank of India in this regard was rejected. As of now, the matter is pending in the London Court of International Arbitration.
The company had funded licence fees of Rs 5,864 crore for 3G spectrum blocks in nine circles through debt and bankers say the recent purchase of spectrum will add to its debt. Through the next two years, the company is expected to undertake capital expenditure of about Rs 1,300 crore, to be primarily funded through debt.