Why Tata Group May Be Looking To Exit The Wireless Business
Tata Sons exploring all possible options for its telecom unit.
The Tata Group reportedly seeks to exit its mobile telecom business as it continues to lose market share, struggles with lack of high-speed spectrum and poor financial health.
According to the Economic Times, the group has informed the government about its plan to shut the wireless operations. The salt-to-software conglomerate’s telecom arm Tata Teleservices Ltd. offers wireless and enterprise services. It also owns 37 percent in the listed Tata Teleservices (Maharashtra) Ltd., which provides mobile services in Mumbai, Maharashtra and Goa circles.
The group is expected to retain the enterprise business and had said in the annual reported for the year ended March that it intends to focus on growth-driving boradband and wireline operations.
In an emailed response to BloombergQuint’s queries, parent Tata Sons Ltd. said that the group is examining all options for Tata Teleservices.
Here’s why the group may be looking at exiting the wireless business:
Losing Ground
It’s been losing customers for the past few months, with subscribers shifting to other operators from March to July, according to the monthly data released by the Telecom Regulatory Authority of India.
The company’s revenue market share has dropped to 5.9 percent in the quarter ended June amid rising competition in the industry.
Weak Spectrum
TTSL holds near 194 megahertz (MHz) across three bands, mostly under the administered regime allocated without competitive bidding. It doesn’t allow telecom operators to provide 3G and 4G services.
Worsening Financials
TTSL has been a drag on Tata Group’s financials. Its consolidated revenue fell 10 percent to Rs 9,682 crore in the year ended March over the previous 12 months. Net loss before exceptional items widened to Rs 3,118 crore. The company had made a one-time gain of Rs 5,227 crore from sale of its investments in ATC Telecom Infrastructure and an increase in the fair value of its investments.
Its debt stood at Rs 34,777 crore and had a negative net worth of over Rs 12,000 crore as of March-end.
TTSL is 48 percent owned by the group parent Tata Sons. Tata Steel Ltd., Tata Communications Ltd. and Tata Power Company Ltd. also hold stakes in the telecom services provider.
