In a debt-free, cash-free deal in October last, Bharti Airtel acquired the consumer mobile businesses of Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharastra Ltd (TTML). Bharti will only pay a part of Tata Teleservices’s unpaid spectrum payment liability. TTSL had sought to exit the mobile telecom business due to heavy losses and debt. But it will continue to operate its enterprise, fixed-line and broadband businesses and retain its stake in tower company Viom Networks. However, this deal has disappointed minority shareholders who had hoped the enterprise would have been profitable in the future. Ace investor and entrepreneur C. Sivasankaran is also a minority shareholder with significant shareholding in TTSL, In an interview, he criticised the deal saying he had invested in Tata Tele, with the hope that the Tatas would be able to run the telecom business profitably.
Do you agree that the proposed deal to sell Tata Tele at virtually zero value, yet retaining the liabilities to repay bank loans of ₹30,000 crore, make a commercial sense for the Tata Group?
To give away anything for zero value does not make any commercial sense for anyone. In the case of Tata Tele, where unfortunately I am also a shareholder, is a case of reckless mismanagement by Mr. N. Srinath under the chairmanship of Mr. Mistry.
The relative combined value of Tata Tele spectrum, fibre and 40 million subscribers is said to be close to ₹30,000 crore on a fair day. Is it better for the Tata group to exit the business in a planned manner by selling the fibre to TPG group (private equity firm) who along with Tata Tele employees made a bid for fiber business etc?
I am not privy to the exact details of the deal with Bharti Airtel, from what I have gathered from the media reports, the deal with Airtel, seems to be favored heavily towards Airtel, but I am not certain about the compulsions for Tata Sons to enter into such a deal. With respect to the Fiber deal, I hear that there is more than one offer, hopefully they will be able to get a fair price for the same.
In your view can the Tatas exit the entire tele services both by selling the spectrum after selling the fiber and also getting some residual value for the 40 million subscribers in the next 18 months?
From the media reports, I can infer that might be the plan.
Tata Tele also have the option of continuing with the profitable circles while shutting down the unprofitable ones like Aircel has chosen to do while the Tata group negotiates the entire exit from the business. This will give them some breathing time. Please comment.
That is also an option, which was before the Tata Group, I hope they must have evaluated all the options before taking up the Airtel deal. This question should be asked to the persons who had done the deal with Airtel, whether they have done this deal by evaluating properly all the options in front of them.
On the other side what does it mean for Bharti Airtel? It appears for them, given that the market cap of Bharati Airtel gone up by 50,000 crore since October 2017 when the deal was announced?
As I said the way deal was structured, it was more favorable towards Bharti Airtel, and the stock market, has rewarded them with the value.
If you were the Chairman of Tata Sons what would have done? Do you think it (Tata Tele) can be made profitable?
Only one thing I would like to bring to the attention, that JIO is a very late entrant in the Telecom Business, as per the latest quarterly reports, they have made it profitable. I had invested in Tata Tele, with the hope that the Tatas will be able to run the telecom business in a profitable manner. Today my investment and the subsequent interest that I have paid to the Banks and Financial Institutions including Tata Capital, has been more than 1000's of Crores, all this investment is zero now. While the Tatas were generous in settling Docomo at a price, while minority shareholders like me, who had no say in the way things were managed in TTSL, have got nothing, this is the real state of affairs.
