Tata Tele says lenders may recall loans of Rs 1,911 crore
New Delhi: Lenders of Tata Teleservices (Maharashtra) Ltd (TTML) may recall loans of Rs1,911 crore as the company has not been able to satisfy them with its financial performance, as per a company note.
The company, in a filing to BSE on Thursday, reported a loss of Rs506 crore for the quarter ended 30 June 2017 against that of Rs127.45 crore in the year-ago period, mainly due to dip in revenues and over two-fold jump in finance cost.
“The company has not been able to satisfy the financial covenants stated in agreements with lenders of long term borrowings and lenders of external commercial borrowings which may result in loans aggregating to Rs191,111 lakh being recalled by the lenders,” TTML said in the notes.
The total accumulated loss of Tata Teleservices as of 30 June have exceeded its paid up capital (Rs 1,954.93 crore) and reserves, the company said in note. The finance cost of the debt ridden company increased to Rs388.17 crore during the reported quarter from Rs179.1 crore it recorded a year ago.
The company was reeling under debt of Rs15,535 crore at the end of 31 March 2017. TTML has received backing of Tata Sons Ltd to pay back loans in case lenders recall the dues.
TTML has been struggling in Indian telecom market in the midst of high intensity tariff war. Its peer Reliance Communications has been given time till December 2017 to service debt. Many telecom operators are facing huge debt in the sector after they had to renew their right to use spectrum and as well as buy additional airwaves through auction.
While spectrum prices have been rising, telecom operators are facing huge cut in margins due to intense competition in the sector. In a bid to give relief to the sector reeling under massive debt and profitability issues, the government has set up an inter-ministerial group which is considering giving telecom companies more time to pay for the spectrum they bought.
The interministerial group is learnt to be favourably considering relaxing the period of deferred spectrum payment to 16 years, to improve the cash flow of telecom companies.