Tata Sons Ltd, the holding company of the $150 billion Tata Group, may be forced to inject new capital into its loss-making telecom arm, Tata Teleservices Ltd, as the unit faces Rs 19,256 crore in adjusted gross revenue (AGR) and other liabilities to the Indian government.
Key Highlights
- Tata Sons considers capital infusion into Tata Teleservices as Adjusted Gross Revenue (AGR) dues escalate beyond ₹19,000 crore, impacting operations.
- Supreme Court rejects AGR dues waiver plea by Tata Teleservices, Vodafone Idea, and Airtel.
Due to its substantial cumulative losses and negative net worth of Rs 17,876 crore, Tata Teleservices cannot fulfill its responsibilities without help. To support the payment, Tata Sons has released a letter of comfort.
The Supreme Court dismissed the petitions filed by Vodafone Idea (Vi), Bharti Airtel, and Tata Teleservices seeking a waiver on their long-standing AGR dues on Monday, calling them "misconceived". The telcos sought relief from the payment of interest, penalty, and interest on penalty components as part of their AGR. However, the Supreme Court has left the door open for the government to provide relief to telecom operators.
Care Ratings warned in a June note last year that the Tata group company's four-year moratorium on AGR-related liabilities would expire in March 2026. TIn October 2021, Tata Teleservices chose to participate in the telecom relief package offered by the Department of Telecommunications, which permitted them to postpone paying their AGR debts. According to the rating agency, Tata Sons had invested Rs 46,595 crore in Tata Tele Business Services (TTBS) up until June 2019. The company was still receiving support letters from the rating agency, which said that it would make the required financial adjustments to make up for any liquidity shortfall within a year from the balance sheet date.
According to the rating agency, the outstanding balance as of March of last year was Rs 17,830 crore, of which Rs 3,367 crore was owed to Tata Teleservices Maharashtra Ltd (TTML) and Rs 14,463 crore to Tata Teleservices Ltd (TTSL). As of March 2025, this has increased to Rs 19,256 crore.
Even though reforms offer some respite, the development underscores the continued financial strain in India's telecom industry.
According to Tata Teleservices' FY25 annual report, the company made Rs 3,626 crore in revenue but lost Rs 994 crore. In order to keep up its impeccable record of paying all debts, Tata Sons paid off all of the telecom company's bank loans after selling its wireless telephony division to Bharti Airtel. It also bought back the share of its previous equity partner, NTT Docomo.
