Tata Teleservices (TTSL) has started preparing for the exit of its thousands of employees after it indicated to the India government about the closure of mobile business.
The shutting down of wireless business of Tata Teleservices, which had 43.7 million mobile customers in June 2017, will benefit bigger rivals such as Bharti Airtel, Reliance Jio, Vodafone-Idea, etc.
Tata Teleservices had 45.54 million mobile and wireline subscribers in June 2017 in India. Out of this, 9.45 million subscribers were in rural India alone.
The Tata Group-owned Tata Teleservices already lost 5.21 million subscribers between March 2017 and June 2017 due to hyper competition from Reliance Jio and Airtel. TTSL does not have presence in North East, Assam and Jammu & Kashmir.
Jio, a company promoted by Mukesh Ambani, has added 14.68 million users and Airtel added 7 million subscribers during the second quarter of 2017. Tata Teleservices, which does not have 4G spectrum, is unable to compete with 4G operators such as Airtel and Reliance Jio.
Tata Teleservices posted adjusted gross revenue (AGR) of Rs 1,732.26 crore in the June quarter of 2017, registering 7.7 percent drop.
There are speculations that Tata Teleservices may be looking for a suitor in Airtel. Airtel, promoted by Sunil Mittal and SingTel, has already acquired Telenor India and bought spectrum from Aircel and Videocon.
Tata Teleservices, according to media reports, is planning to offer 3-6 months’ exit package to some employees, VRS to elder employees, while some employees will be absorbed in group companies. Tata Communications is part of the Tata Group.
Tata Teleservices, which could not a get a strong overseas partner, was not aggressive during the spectrum auction in the recent past. NTT Docomo, its joint venture partner with 26 percent stake, exited from Tata Teleservices in 2014 due to mounting losses. The efforts of Tata Group to find a new partner did not materialize due to adverse market conditions.
Tata Teleservices did not buy enough spectrum to run 3G services in line with Idea Cellular, Vodafone and Bharti Airtel. Tata Teleservices never acquired 4G spectrum as well.
Tata Teleservices CFO Saurabh Agrawal and CEO N Srinath on Friday met officials from Department of Telecommunications (DoT) to discuss about the closure plan. Tata Teleservices indicated about spectrum trading with rival mobile operators.
The ongoing consolidation and the closure of Tata Teleservices will be a major setback for telecom equipment makers such as Ericsson, Huawei, ZTE, Nokia, among others.
