Tata’s Potential Wireless Business Shutdown Faces First Hurdle
American Tower Corporation said its contract with Tata Teleservices Ltd. is “non-cancellable” and is valid for another six years, after reports suggested that the Tata Group’s flagship telecom arm is looking to wind down its wireless operations in India.
ATC will seek to enforce the full contract with TTSL, the wireless infrastructure provider said in a release on its website today.
American Tower expects to fully enforce the average non-cancellable remaining contract terms on the leases with Tata Teleservices as well as the other contractual provisions included in the Viom transaction.American Tower Corporation Statement
Tata Sons and Tata Teleservices did not immediately respond to a query from BloombergQuint on the ATC statement. According to the Economic Times, the Tata Group has informed the government about its plan to shut down the wireless business.
ATC India has a portfolio of 58,000 towers in India after it acquired 51 percent stake in Viom Networks Ltd. TTSL and Tata Sons Pvt. Ltd. hold 32.86 percent and 2 percent, respectively, in Viom, which was later renamed ATC Telecom Infrastructure Pvt Ltd.
ATC increased in stake in Viom Networks to 51 percent by acquiring 19.63 percent stake for Rs 2,807.95 crore from TTSL. The fair value of the remaining 32.86 stake held by TTSL stood at Rs 4,287.5 crore at the end of last financial year, which would be wiped out if the Tata Group company were to wind down its wireless business.
More than 90 percent of the revenue and gross margins were generated on sites acquired as part of Viom Networks’ transactions completed in April 2016, ATC said in its release today.
For the quarter ended June, $80 million or 5 percent of the ATC’s consolidated revenue and $40 million of its gross margin came from TTSL.