India's Tata Teleservices is planning to close down its operations later this month but considering whether to retain assets such as its fiber optic unit, according to media reports.
The gloomy development, news of which came shortly after rivals Reliance Communications Ltd. and Aircel Ltd. called off merger plans, would mark the first time that Tata Group has closed down one of its businesses in its 150-year history. (See India's RCom Eyes Asset Sales After Aircel Merger Collapses.)
Tata Teleservices Ltd. has a debt of around 340 billion Indian rupees ($5.2 billion) and been exploring merger or acquisition options for some time. It was previously thought to have been talks with Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Vodafone. Yet no deals have come through, leaving it with little option but to consider a closure.
With just 40 million subscribers, Tata Teleservices has been one of a number of smaller players that have struggled to cope following the aggressive entry into the mobile market of Reliance Jio in late 2016.
Predatory pricing by RJio led to plummeting profits and revenues for all service providers. But the situation proved especially tough for smaller telcos that lacked the resources to compete. Videocon Telecommunications Ltd. , Telenor and Tikona Digital Networks Pvt. Ltd. have all acquired by Airtel in the last year. Meanwhile, giants Vodafone India and Idea Cellular Ltd. are merging their operations.
Tata Teleservices was previously caught up in a dispute between Tata Group and Japan's NTT DoCoMo, a partner of the firm at the time. Even before RJio launched services, it had closed down operations in a few circles and has steadily been losing market share.
Last year, it incurred losses of about INR24.09 billion ($360 million), with revenues falling to INR96.6 billion ($1.4 billion) from INR107.08 billion ($1.64 billion) in the previous fiscal year.
— Gagandeep Kaur, contributing editor, special to Light Reading