Shares of Tata Teleservices Maharashtra tumbled on Tuesday after the Tata Sons Chairman N Chandrasekaran said that he would take a “tough call” about the telecom business in this financial year. N Chandrasekaran said that Tata Teleservices is in “really bad shape” lying under heavy debt-burden and monthly cash losses. Tata Teleservices was burdened by Rs 31,000 crore debt in addition to spectrum liability and was incurring cash losses on a month-on-month basis, he added.
Following the statement, the stock of Tata Teleservices crashed as much as 14% to hit the 52-week low of Rs 4.3 on NSE. Amid the heavy sell-off, about 95 lakh shares exchanged hands in the wee hours of trading on both BSE and NSE. In the late morning trade, the shares recovered slightly, but still down 8% at Rs 4.6.
“Tata Teleservices…is in a really bad shape. They have a huge debt. The footprint we have and the spectrum we have is very difficult…close to impossible for us to recover. So that is a company we are going to find a solution very quickly,” N Chandrasekaran said in an interview to CNBC TV18. On being asked that how much time will he take to decide on the future of Tata Teleservices, Chandrasekaran said, “I am looking at all options and I will figure out a way this fiscal year”. When pressed if it would mean closing down the business, he said: “It could mean anything. Basically, I don’t want to put good money after bad money.”
Earlier this year, In yet another sign of the increasing stress on the telecom industry, reeling under the pressure of immense competition from the giant Reliance Jio, the Tata group firm Tata Teleservices laid off 500-600 people. The employees, which the company executives said had been let go to tide over difficult times in the hyper-competitive telecom market, were from sales and other related functions, and from across locations in the country, PTI reported citing two unidentified people.
Meanwhile, Sensex and Nifty opened marginally higher on Tuesday as optimism about the better-than-expected second quarter earnings for the financial year 2018 and macroeconomic data grew. The benchmark Sensex rose as much as 111 points to hit the day’s high of 31,957.61 after opening 64 points higher at 31,910.82. The broader Nifty 50 jumped 30 points to mark the day’s high of 10,019.3 points after starting 25 points higher at 10,013.7.