Mumbai: India’s sixth largest mobile and wireline operator, Tata Teleservices Ltd, has become operationally profitable even as it prepares for more intense competition in the market for Global System for Mobile (GSM) technology standard that’s dominant in India.
In an interview, managing director Anil Sardana said Tata Tele had turned profitable measured by Ebitda, or earnings before interest, taxes, depreciation and amortization.
“We are very clearly Ebitda positive for last one year,” he said. “Most of the operators who started in 1994 turned Ebitda positive in about eight to nine years’ time, cash positive in 10 to 11 years, and PAT (profit after tax) positive in 11 to 13 years. At Tata Tele, we became Ebitda-positive in three years.”
Facing challenges: Tata Teleservices managing director Anil Sardana says that the presence on both GSM and CDMA platforms has helped the firm to be better equipped to handle the demand of the mass market.
The challenge for the firm is how to stay viable as it prepares to roll out its GSM network nationwide, Sardana said. The company has about 40 million subscribers nationwide, and has earmarked $2 billion for the national GSM rollout.
Tata Tele signed up 2.3 million subscribers in July, up from 625,000 additions in June and easily surpassing the company’s record addition of 1.26 million in March, largely on the back of its GSM launch in five telecom circles.
The company does not provide a breakup for subscriber additions in the GSM and rival Code Division Multiple Access (CDMA) markets.
Sardana, a Tata group veteran and an insider who had in the past successfully turned around North Delhi Power Ltd, the electricity distributor in Delhi where the Tatas hold a majority stake along with the state government, came to troubled Tata Tele when expatriate chief executive officer Darryl Green resigned.
Some analysts doubt whether the company is completely out of the woods yet although they say Sardana’s entry had put Tata Tele in a bit of a “ramp-up mode” and with a “more visible market presence.”
“They have made some progress,” said a management consultant who spoke on conditions of anonymity because he has worked with Tata Tele and other telecom firms.
“The business matrix has clearly improved and there are some signs of trending upwards,” he added, referring to the addition of the GSM network and wireless Internet cards business.
Mint had on 15 December reported about Tata Tele’s capital restructuring exercise as part of which the company wrote off Rs5,141.28 crore by halving equity capital, and a sizeable portion of the share premium account, and another tranche of Rs1,648 crore by revaluing its stake in Tata Teleservices (Maharashtra) Ltd, its listed subsidiary.
The three-pronged exercise also saw the induction of a new strategic partner NTT DoCoMo Inc, in November 2008, when the Japanese telecom firm paid $2.7 billion (Rs13,070 crore) for a 26% stake in Tata Tele.