Tata Teleservices (Maharashtra) board approves up to Rs 20,000 crore fund-raising plans

NEW DELHI: Tata Teleservices (Maharashtra) said its board approved a proposal to raise as much as Rs 20,000 crore through an issue of preference shares to promoters or via debentures, with the proceeds possibly being used to pare debt.

The move comes days after the Tata Group said it would sell its consumer mobile business to market leader Bharti Airtel on a debt-free, cash-free basis.

Tata Teleservices (Maharashtra) Ltd (TTML), a subsidiary of Tata Teleservices (TTSL), revealed its plan in a notice to the Bombay Stock Exchange on Wednesday, sparking a rise in the stock. TTML rose 5 per cent on the BSE to close at Rs 5.88 on Wednesday.


It didn’t specify the purpose of raising the funds. Analysts said the money could be used to repay a part of the roughly Rs 31,000-crore debt that TTSL and TTML have on their books.

TTSL owns over 36.5 per cent in TTML, which offers services only in the Maharashtra and Mumbai circles.

“It is likely that the Tatas want to repay the debt before seeking any approvals for the sale of its wireless business to Airtel as they don’t want lenders to raise any objections,” said a Mumbai-based analyst. “The Tatas wouldn’t want a situation which was faced by Reliance Communications whose deal to merge with Aircel faced objections from lenders.”

The RCom-Aircel deal was ultimately scrapped.

TTML’s proposal is “subject to approval of members either by way of postal ballot or at the extraordinary general meeting”, the company said in its notice to BSE.

The telco said the fundraising will be done through the issue of one or more types of instruments including redeemable preference shares to promoters, non-convertible debentures in one or more tranches, and/or inter corporate deposit/loans or commercial paper from the promoters and others.

Tata Group holds its stake in TTML via TTSL, Tata Sons, Tata Power Co. and Panatone Finvest. The Tata Group last week announced that Bharti Airtel will take over more than 40 million subscribers of TTSL and TTML across 19 telecom circles, besides spectrum, other assets and people employed in wireless operations.

Airtel will get access to 178.5 MHz of spectrum across the 800, 1800, 2100 MHz bands, around 40 per cent of which is ready for being used for 4G.

The deal will allow Bharti Airtel to close the gap with a post-merger Idea-Vodafone combine in terms of revenue market share and subscriber base, and allow the Tata Group to exit its stressed telecom operations weighed down by debt, spectrum liability and monthly cash losses.

While all of the Rs 31,000-crore debt will remain with the Tata Group, Airtel will assume payment of close to 20 per cent of theRs 9,000-10,000 crore deferred payments for spectrum to the government.

Tata will pay the rest. Tata Sons chairman N Chandrasekaran told ET previously that the mobile business was in a “really bad shape” and that a “tough call” would have to be taken on the business in this financial year.