Tata Teleservices Maharashtra, the listed unit of TTSL, said it had not taken any “firm decision” on how to go forward, reacting to a news article in the Business Standard that said the company will shut down this month.
Reacting to media reports, the company said it “continues to explore all options in respect of its business, given the challenging business environment in the telecom industry.
“At this stage, Tata Teleservices has not made any firm decision on the way forward for its telecom business,” it added.
A full shut down of the company would not be in the interest of any of the stakeholders such as the banks, as they would lose their money in full.
On the other hand, a sale — either in total or in parts — would enable them to recover at least part of their exposure.
The Tata Group company has been hit hard by a shift in telecom services from a ’boutique’ model to a volume-based model, as it does not have the infrastructure required to support high volumes of data and voice services.
Tata Teleservices (TTSL) has been reported to be in talks with Bharti Airtel regarding a sale, but the talks reportedly collapsed on account of the high levels of debt on its balance sheet.
The company is estimated to have close to Rs 40,000 cr in debt, which has been a major stumbling block for any sale of the company.
On the other hand, the company could sell its assets, such as spectrum, to raise several thousand crore rupees and use it to compensate its lenders.
The company has been allocated lucrative 800 MHz spectrum that many operators are keen to lay their hands on for expanding 4G services.
It has reportedly been in talks with banks and other lenders to try to get them to agree to take a ‘haircut’ on their loans, and agree to a sale of the company or its assets.
On Saturday, Economic Times reported that company officials, including CFO Saurabh Agrawal and MD N Srinath met officials from the Department of Telecom to inform the latter of its ‘plans to shut down’ its mobile business.
“They will start the process within this month,” the report quoted a government official as saying.