Tata’s exit from Indian mobile market could come by the end of this year as telco presses ahead with workforce reductions, spectrum sale and surrender plans
Tata Group is preparing to close down its Tata Teleservices (TTSL) business by the end of this year or early in 2018, according to Indian press reports, and it is working on plans to lay off the majority of its 5,000-plus workforce.
The company last month asked its circle-level heads to leave their posts by the end of March next year, the Economic Times said, citing unnamed company officials and industry insiders. But a shutdown could come sooner than that.
It is also giving notice periods of between three and six months to much of its staff, and is working on severance packages for those willing to leave earlier, and on a voluntary retirement scheme, the paper said, noting that Tata Teleservices had a workforce of 5,101 at the end of March 2017.
"Very few [staff] will get absorbed in other group companies," the paper quoted a senior official as saying. "It is unfair to saddle other Tata companies with employees of TTSL."
There has been talk of Tata selling out of the telecoms business for some time, with reports on the details of the exit becoming more frequent in recent months.
Late last month Livemint reported that while Tata is keen to sell its mobile operations, it could seek to retain certain assets, such as its fibre business.
Tata Teleservices offers mobile services under the Tata DoCoMo banner. It has struggled to compete for a number of years, its situation greatly exacerbated by the entry of Reliance Jio Infocomm into the market last year.
The operator lost 1.6 million mobile customers in July, ending the month with a subs base of 42.1 million and a market share of just 3.55%, according to the Telecom Regulatory Authority of India (TRAI).
In a separate report at the weekend, the Economic Times said Tata has informed the government informally of its plans to close down its mobile operations and write off related losses.
Company executives met with officials from the Department of Telecommunications (DoT) to discuss ways of selling and/or giving back Tata Teleservices’ spectrum holdings.
An unnamed source said the telco can surrender spectrum that was allocated to it initially by the government, but it will not receive a refund. It can seek to trade the spectrum it acquired by auction, but should it fail to find a buyer it would still be required to pay the relevant fees for the frequencies.
The paper said Tata is looking to start the process of closing down the business within a month and will have 60 days to complete it.
Should the report prove accurate, Tata will be out of the Indian mobile by the end of the year or early in 2018.