Tata Sons, which holds majority stake in its subsidiary Tata Teleservices Maharashtra Limited (TTML), approved an investment of Rs 3,000 crore into the company through redeemable preference shares, according to a BSE notification. Tata added in the notification that it did not approve the investment through the compulsory convertible preference route, as reported by Business Standard.
The board had met on June 25th to discuss terms of investment into TTML, and it is subjected to all shareholders and regulatory approval.
Mounting losses and troubles with NTT DOCOMO stake
The approval for investment comes at a time when Tata Teleservices posted losses of Rs 79.64 crore loss for the quarter ended December 31, 2015 (Q3 FY16), which is the telco’s 22nd straight loss making quarter. Following which, the company was ordered to pay $1.17 billion in damages to Japan based telco NTT DOCOMO by a London court, as indicated by Livemint. Tata Sons and NTT DOCOMO together operates Tata Docomo in India, which is a joint venture between the two entities. NTT DOCOMO had acquired a 26% stake in TTML for around $2.7 billion in 2008.
The report added that Tata had failed to find a seller for NTT DOCOMO’s 26% stake in the loss-making company Tata Teleservices when NTT had expressed interest to sell the entire stake in 2014. The terms of agreement between both companies provides an option for the acquirer (NTT DOCOMO) to request a suitable buyer for at least 50% of the acquired price.
Other updates from Tata Group
Tata Comm to sell stake in Neotel: Last month, Tata Communications, the global telecom subsidiary of Tata Group had signed an agreement with Liquid Telecom to sell its majority stake in South Africa based telecom provider Neotel for ZAR 6.55 billion.(~$428 million). While announcing its Q1FY16 results Tata said that it had write off Rs 190 crore of Neotel during the quarter in impairment charges, without disclosing Neotel’s consolidated results.
STT buys major stake in Tata subsidiary: In May, Singapore Technologies Telemedia (STT) through its global data centre subsidiary ST Telemedia Global Data Centres (STT GDC) acquired 74% stake in Tata’s data centre business in India and Singapore. Tata will remain as a significant shareholder in its data center business by holding the remaining 26% stake. A Mint report pegged the size of deal at $634 million.