Ahead of the sale of its consumer mobile services business to Bharti Airtel, Tata Sons plans to infuse over Rs 36,000 crore in Tata Teleservices to strengthen the telecom company's balance sheet. The proposed investment follows the Japanese telecom partner NTT DoCoMo's exit from Tata Tele.
According to the October agreement, Bharti Airtel will acquire Tata Tele's consumer mobile services business on a no-cash, no-debt basis. The loss-making Tata Tele will use the money to clear its debt, which stands over Rs 40,000 crore. This debt includes deferred spectrum fees of Rs 9500 crore. Bharti Airtel will take only a small part of the spectrum liabilities, which would be about Rs 2000 crore.
The investment into Tata Tele will be the largest infusion by Tata Sons in an operating Tata company this year. In February, Tata Sons, the holding company of the Tata Group, had decided to invest Rs 10,000 crore in various group companies to raise its holding in these entities.
On August 9, the board of Tata Sons had approved investments in various group companies whose estimated value for fund infusion was Rs 36400 crore. The investments would be either through the equity route or by providing corporate guarantees to these companies for their borrowing programs. A Tata source said that Rs 36,400 crore will be largely invested in Tata Tele. In October, Tata Tele's listed subsidiary Tata Tele (Maharashtra) had said it plans to raise up to Rs 20000 crore through various sources, including from Tata Sons.
Tata Sons will finance the Rs 36400-crore investment through debt. Currently, the company has an AAA long-term rating from Crisil, indicating the highest level of safety. - TOI