Tata Teleservices reportedly taking steps towards closure

9 Oct 2017

India’s Tata Group is planning to close down the wireless operations of its Tata Teleservices Limited (TTSL) unit in India – which operates via several brands, including Tata DOCOMO and Tata Indicom – the Economic Times reports, citing several officials with details of the development. According to the unnamed sources, Tata Group CFO Saurabh Agrawal and TTSL managing director Srinath Narasimhan were amongst a group of Tata representatives that met with the Department of Telecommunications (DoT) late last week to discuss the potential sale or surrender of the company’s spectrum holdings. One source was quoted as saying that the company wished to unofficially inform the DoT of its intention to shut down and write off its losses. TTSL is expected to try and sell the spectrum it won through auctions to other providers to help mitigate its losses, but will likely have to return any administratively awarded frequencies to the government. The company has yet to make an official statement confirming its planned closure, but the cellco has ceased taking on new subscribers in several circles, and a number of senior officials have discussed the group’s exit plan for its roughly 5,000-strong workforce with the press.

Tata’s loss-making and heavily-indebted telecoms arm initially launched a CDMA network in 2002 – having previously operated a WiLL service since 1998 – before switching on a parallel GSM system in 2008 and later adding W-CDMA in 2010. Despite an injection of capital from a new partner in late 2008/early 2009 in the form of Japan’s NTT DOCOMO, the firm struggled to keep pace with its competitors: its market share peaked at just under 12% in late 2010, and has gradually fallen over the subsequent years, to less than 4% by mid-2017. DOCOMO chose to exit the business in 2014 sparking a protracted legal battle, which ultimately culminated this year with Tata being forced to buy out the Japanese company’s 26% stake for INR72.5 billion (USD1.1 billion).

As previously reported by TeleGeography’s CommsUpdate, Tata had considered filing for bankruptcy for the beleaguered unit, but decided against the move due to the potential impact it could have on other Tata companies. The company instead sought to exit the market via a merger or takeover, but talks with a number of prospective buyers including market leader Bharti Airtel, also proved unsuccessful.

India, NTT DOCOMO, Tata Teleservices (TTSL, incl. TTML, Tata Tele Broadband)