Tata Teleservices Backs Out from Giving Equity to Govt

For the total dues of Rs 850 crore wrongly assessed by the company, the government would have got approximately 9.5% equity. However, since the amount is much less, Tata Teleservices should be able to pay it instead of giving equity to the centre.

Highlights

  • Tata Teleservices has announced that it won’t be going ahead with its plan of giving equity to the government against the dues.
  • The only private telecom company in the country that is giving equity to the government is Vodafone Idea (Vi) now.
  • The Indian government had given an option to the telecom companies that they can convert their outstanding dues into equity for the centre.

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Tata Teleservices

Tata Teleservices has announced that it won’t be going ahead with its plan of giving equity to the government against the dues. This is because the company had wrongly analysed its dues to be Rs 850 crore. The Department of Telecommunications (DoT) informed Tata Teleservices that its dues are only Rs 195.22 crore and not Rs 850 crore.

Thus, after getting to know the actual amount, the board of directors, in a meeting held on February 1, 2022, have expressed their desire of withdrawing the conversion of debt into equity and informed DoT of the same.

Tata Teleservices Would Have Had to Give Up 9.5% of the Company

For the total dues of Rs 850 crore wrongly assessed by the company, the government would have got approximately 9.5% equity. However, since the amount is much less, Tata Teleservices should be able to pay it instead of giving equity to the centre.

So the only private telecom company in the country that is giving equity to the government is Vodafone Idea (Vi) now. Vodafone Idea is giving up 35.8% of the company to the government, which is more than what each individual promoter would hold post the conversion.

For the unaware, the Indian government had given an option to the telecom companies that they can convert their outstanding dues into equity for the centre. Bharti Airtel had denied exercising this right, and the same was expected of Vodafone Idea. But on January 11, 2022, the third-largest telecom company in the country announced that it would be giving equity to the government.

Even though the Government of India (GoI) will hold the maximum shares of the company, Vodafone Idea won’t become a public sector unit (PSU). The government has cleared its intention with the company and said that as soon as things stabilise, it will exit from the business by selling its shares back to the private sector.

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