Tata Sons may have to bail out Tata Tele for AGR dues

MUMBAI: Tata Sons may need to invest more money into the loss-making Tata Teleservices to restructure its balance sheet after the Supreme Court's unfavourable ruling in the AGR case. The telecom company currently owes over Rs 19,250 crore to govt in AGR and other dues.

Its net worth is negative by more than Rs 17,870 crore, and it faces large accumulated losses, making it extremely difficult for it to settle the debts on its own.

Tata Sons will have to fund these payments, as it has a strong balance sheet. It recently became debt-free and received a record dividend of Rs 32,722 crore from Tata Consultancy Services in FY25. This dividend and other income sources provide Tata Sons with the resources needed to meet Tata Teleservices' obligations. Tata Sons declined to comment.

This week, SC rejected appeals from Tata Teleservices and other telecom companies that sought a waiver of AGR dues. However, the court left room for the govt to help these companies if it chooses. Vodafone Idea, for example, sought relief of Rs 30,000 crore on AGR dues.

In June 2024, Care Ratings cautioned that Tata Teleservices faces the risk of AGR liabilities after a four-year relief period ends in March 2026. The company used a relief scheme from the Department of Telecom in October 2021, which allowed it to delay paying AGR dues.

In FY25, Tata Teleservices lost Rs 994 crore on revenue of Rs 3,626 crore, its annual report showed. After selling its wireless business to Bharti Airtel, Tata Sons paid off Tata Teleservices' bank loans and bought back NTT Docomo's stake. On a full group basis, Tata Teleservices had negative retained earnings of Rs 84,655 crore in FY25.