India’s Tata may close down telecom unit this month
After Tatas failed in its attempt to sell the beleaguered telecom business, it is preparing to close it down by the end of this month
India’s salt to software conglomerate Tata Group is preparing to close its telecom business and an announcement is expected later this month, reports Business Standard. If this happens, it will be the first major Tata unit to be closed down in its 149-year-old history.
Senior executives at Mumbai-based Tata Teleservices, which operates wireless, wireline and broadband services, have already been told of the possible closure. Even subscribers are being informally told to migrate to other service providers through mobile number portability, the daily added.
This is being done after Tatas failed in its attempt to sell their telecom business to players such as Bharti Airtel and Vodafone. Tata ventured into telecom business nearly a decade ago and became a leader in CDMA technology, but this technology failed to garner enough market share among India’s mobile users.
Later in 2009, it entered into a joint venture with Japan’s NTT DoCoMo for US $2.7 billion. In April 2014, DoCoMo decided to sell its entire 26.5% stake in Tata Teleservices and the latter had to shell out US$ 1.17 billion.
During closure, the major challenge for Tatas will be its 5,000-plus employees. The group is looking at options to place Tata Teleservices’ employees in other businesses once a shutdown happens, but a layoff cannot be ruled out.
They also need to sort out other issues such as spectrum sale, foreign partners, technical tie-ups, real estate, offices, and consumers. The group is believed to be in talks with the Department of Telecommunications and the Telecom Regulatory Authority of India to sort out some of these issues, the daily added.