The Tata Group exited the telecom business it was running around 2 years back and has now completed settling the debts the company had accumulated. The total payout is estimated at Rs 50,000 crore of which the payment to the Department of Telecommunications (DoT) alone was Rs 10,000 crore. This was done to help complete the sale of its mobile-phone services business to Bharti Airtel, as per a PTI report.
Tatas decided to get out of the business once Reliance Jio launched its low-priced services in the market, which included calls within the country absolutely free and internet at highly competitive rates.
There were two companies in the vertical, Tata Teleservices Ltd and Tata Teleservices (Maharashtra) and both these entities got merged with Bharti Airtel. The deal was â€˜debt-freeâ€™, meaning the debts on the books of these companies at the time of the merger, in 2017, had to be settled by Tatas, which they have done now.
Of the total amount, Rs 40,000 crore was owed to other creditors in the business. The final payment to the DoT was reportedly made a few weeks back and a little earlier, the other debts were also cleared, according to a statement issued by the company. â€œAll debt obligations of the consumer mobile business of Tata Teleservices have been repaid as per schedule" Tata Group said in a filing to the exchanges. The holding company of the group, Tata Sons Pvt. Ltd has taken it upon itself to settle all dues.
The telecommunications industry in the country is going through a churn following the entry of Reliance Jio. While Bharti Airtel has had to bear with huge reduction in profits, two other players, Vodafone and Idea Cellular decided to merge together to become Vodafone Idea Ltd to take on Jio.