Tata Sons writes off Rs 28,651 crore on Telecom

Tata group holding company Tata Sons has written off its entire investment of Rs 28,651.69 crore in loss-making telecom arm Tata Teleservices, according to a regulatory filing.

Tata Sons is in the process of transferring the consumer mobile business of Tata Teleservices to Bharti Airtel and hiving off the enterprise segment to merge with the group’s networking arm Tata Communications.

“The company has considered it appropriate to write off the entire investment of Rs 28,651.69 crore in Tata Teleservices Limited,” Tata Sons said in a filing. The effect of impairment was reflected on Tata Sons’ consolidated net profit which dropped to Rs 4,379 crore at the end of 2017-18 from Rs 18,432 crore in 2016-17.

On a standalone basis, the net profit of Tata Sons increased by 6 per cent to Rs 873 crore in 2017-18 from Rs 824 crore in 2016-17. According to the filing, Tata Teleservices recorded an impairment loss of Rs 16,891.28 crore, including Rs 1,265.81 crore pertaining to the prior period, on the consumer mobile business assets based on an assessment of its recoverable value.

On a consolidated basis, Tata Sons posted a 14% rise in total revenue to Rs 1,96,903 crore in the year ended March 2018, from Rs 1,73,178 crore in the previous year. Profit after tax declined to Rs 4,379 crore, from Rs 18,432 crore, after exceptional items worth Rs 21,216.2 crore, compared with Rs 7,352.7 crore a year ago, Tata Sons said in filings with the Registrar of Companies.

Tata Teleservices became subsidiary of Tata Sons from an associate firm with effect from February 2017 after its arrangement with NTT Docomo ceased.

The heavy tariff war triggered by the entry of Reliance Jio in 2016 led to Tata Sons signing a pact with Bharti Airtel to hive off consumer mobile business of Tata Teleservices without any debt transfer to the Sunil Bharti Mittal-led firm.