Even as there is talk of UK telecom giant Vodafone buying out Tata Teleservices (TTSL), the Tata group's holding company Tata Sons pumped close to Rs 2,400 crore into it last week by way of convertible preference shares.
The move is aimed at infusing liquidity into the telecom arm, whose capital has been completely eroded.
Tata Teleservices has an equity capital of Rs 4,712 crore as against accumulated losses of Rs 6,575 crore for the year ending March 2013. In fiscal year 2012/13, the company reported a turnover of Rs 10,859 crore with a net loss of Rs 4,858 crore.
Banking sources say the additional capital from the promoters was necessary to get any further debt funding from the banks.
But the additional funding from majority shareholder Tata Sons which holds 36.17 per cent in TTSL,has come with a rider.
"The conversion of preference capital into equity will take place before the 24 month maturity period if there is a merger of Tata Teleservices with any other entity," says an insider. Some believe the equity expansion has been done keeping in mind the possible merger with Vodafone in the near future.
The move is aimed at infusing liquidity into the telecom arm, whose capital has been completely eroded.
Tata Teleservices has an equity capital of Rs 4,712 crore as against accumulated losses of Rs 6,575 crore for the year ending March 2013. In fiscal year 2012/13, the company reported a turnover of Rs 10,859 crore with a net loss of Rs 4,858 crore.
Banking sources say the additional capital from the promoters was necessary to get any further debt funding from the banks.
But the additional funding from majority shareholder Tata Sons which holds 36.17 per cent in TTSL,has come with a rider.
"The conversion of preference capital into equity will take place before the 24 month maturity period if there is a merger of Tata Teleservices with any other entity," says an insider. Some believe the equity expansion has been done keeping in mind the possible merger with Vodafone in the near future.
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