Tata Group’s tortured tryst with telecom
Despite being one of the first participants in space, Tata Group’s long-standing commitment to the Indian telecommunications market ended with the release of Tata Teleservices. After spending thousands of dollars over the past 22 years, rising losses (your debt is a huge break of 31,000 rupees over spiral losses) and the inability to seize a significant market share have forced the group to reduce its losses and seek a sale of its assets.
The initial incursion of the Tata group into the company was favorable. In 1995, Tata Cellular Ltd (TCL), the first entity of the group in the company, won the license to launch mobile services in Andhra Pradesh. Soon after, in 1997, Tata Teleservices Ltd (TTSL) made a successful bid for the basic services license in Andhra Pradesh. TCL then merged with Birla AT & T Ltd to expand its coverage to four circles, while the newly created entity Birla Tata AT & T Ltd (BTAL) later merged with mobile in 2001 GLP, there was one of the market leaders in its commercial circles
Perhaps the genesis of the inability of this stratified group to break the enigma of the telecommunications market was in an incorrect assessment of the potential of the Indian market and the disruption that cellular technology would cause. In February 2002, the group estimated that “fixed teledensity in India to a very low 4%, absolute growth in fixed telephony services will lead to additions of the number of mobile subscribers over the next 10 years. “That year, the government opened most telecommunications sectors, including long distance and Internet, to all participants. The Tata Group, as well as Reliance Infocomm and Bharti Televentures, have announced that they are extending to all these areas to emerge as an integrated telecommunications company. For this, an acquisition and an association were made.
In 2002, it acquired Videsh Sanchar Nigam Ltd. (VSNL), which became Tata Communications, a 100% interest in the international long-distance lucrative business, assuming that overseas calls to and from from India to the most lucrative market order services. At the same time, he acquired several foreign companies, including Tyco Global Network and Teleglobe, to acquire a global customer base. It was not unusual, at the beginning of the 21st century, for emerging Indian telecom players to look at foreign markets. Bharti signed a joint venture with SingTel for an i2iCN submarine cable company in 2000, while in 2003 Reliance Communication acquired Flag Telecom. But in the process, Tata seemed to divert her attention from the domestic market, which was now about to take off.
Distracted perhaps by Corus’s multi-million dollar steel acquisitions and Jaguar Land Rover activity in the cars, the group seemed to have made the wrong phone calls. He erred in choosing the CDMA route for his mobile backend and only adopted the now omnipresent global system for mobile technology (GSM) in 2008 when he was linked to NTT DoCoMo. Until then, it was too late. Bharti Airtel and Vodafone (which acquired a majority stake in Hutchinson Essar in May 2007) were already well established, market and business leaders having changed inexorably.
From that moment on, this was a battle for survival. In November 2008, NTT Docomo of Japan acquired a 26% stake in Tata Teleservices for approximately 13,070 rupees ($ 2 billion). Six years later, the Japanese company left the company selling its stake in Tata Indicom to Tata Teleservices after suffering a massive loss of $ 1.3 billion. In the middle was the joint venture of Tata Teleservices to market mobile connections with Virgin Mobile by Richard Branson in 2008, which ended three years later with the Tatas buying Virgin’s 50% stake.
Despite these signs that the company was not going anywhere, the group left the decision to go out, hang up. It was unusual, because in the past he had always been very careful and ruthless to cut off any business that did not pay. In 2000, when he was stripped of his remaining stake in the associated cement companies, was an acknowledgment of the fact that it could not be a market leader in cement and so it was best to let him settle for a weak side. On the other hand, even in July 2016, the group continued to invest in its loss-making subsidiary Tata Teleservices Maharashtra Ltd (TTML).