People like me, who had no say, got nothing: Sivasankaran
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 to DoT over the next 10 years. 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 be 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. Excerpts:
Does the proposed deal to sell Tata Tele at virtually zero value, while retaining liabilities such as bank loans to the tune of Rs. 30,000 crore, make 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, [it] 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 Rs. 30,000 crore. Is it better for the Tata group to exit the business in a planned manner by selling the fibre to private equity firm TPG, which, along with Tata Tele employees, had made a bid for the fibre business?
I am not privy to the exact details of the deal with Bharti Airtel. From what I have gathered from media reports, the deal with Airtel seems to be favoured heavily towards Airtel, but I am not certain about the compulsions for Tata Sons to enter into such a deal. With respect to the fibre deal, I hear that there is more than one offer; hopefully they will be able to get a fair price for the same.
Can the Tatas exit the entire tele services both by selling the spectrum, after selling the fibre, and also getting some residual value for the 40 million subscribers in the next 18 months?
From media reports, I can infer that that might be the plan.
Tata Tele also has the option of continuing with profitable circles while shutting down unprofitable ones. This will give the group some breathing time as it negotiates a full exit. Please comment.
That is also an option which was before the Tata Group, I hope they have evaluated all the options before taking up the Airtel deal. This question should be asked of 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.
What does it mean for Bharti Airtel? The market cap of Bharti Airtel has risen Rs. 50,000 crore since October 2017 when the deal was announced.
As I said, the way deal was structured, it was more favourable towards Bharti Airtel, and the stock market has rewarded them with the value.
If you were the chairman of Tata Sons, what would you have done? Could Tata Tele have been made profitable?
Only one thing I would like to bring to [your] attention... 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, is in the thousands of crores. All this investment is zero now.
While the Tatas were generous in settling Docomo at a price, 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. – The Hindu