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Tata TeleServices prepares to shut down and lay off more than 5000 employees

Tata Teleservices (TTSL), the telecom unit of Tata Sons is on the verge of shut down which will impact most of its 5000+ employees. They have prepared a detailed exit plan which includes 3-6 months’ notice for its employee and severance package for people who wish to leave the company before the notice period. They also have a VRS (Voluntary retirement scheme) for elders and plan to transfer a small set of their employees to other positions within the Tata group of companies.

Tata TeleservicesTata Teleservices

The debt-laden Telecom Company has been going through a tough phase recently and owes more than Rs. 28,000 crore to banks. Though the board has invested more than Rs. 50,000 crores throughout the years, the company was not able to sustain and grow due to tough competition from other players. The mobile services business had caused a huge downfall on the yearly revenues of the Tata Sons’ group of companies in the current fiscal year. The profits plummeted by 72% Rs. 832 crore.

debt-history

debt-history

Tata Teleservices was established in 1996 and it started the services with only landline operations. The company launched their CDMA operations in 2002 and later extended GSM services in 2008. NTT DoCoMo invested around Rs. 14,000 crores on the TTLS group which later in 2014 determined to get out of the loss-making joint venture due to poor financial performance.

Tata Group chairman N Chandrasekaran has been evaluation this option for quite some time after the failure of attempts to sell this loss-making unit. In the 149-year-old history of Tata Group, it is the first major business unit to be shut down. The company has given time till March 31st, 2018 for the circle heads to exit the firm. The Tata conglomerate should take a huge hit on its balance sheet since the consolidated debt of Tata Teleservices is more than Rs. 34,000 crores.

One of the senior officials said that the Tata Group has always taken care of its employees, but it does not plan to absorb all the affect employees of Tata Teleservices to other groups. Only people who have certain niche skill sets that match the requirements in other groups will get a transfer. As of March 2017, there was around 5101 employees on-role at TTLS based on their latest annual reports.  Circle heads who wish to resign early are offered the salary for remaining months of the current financial year. The employees are also given a notice of 3-6 months and whoever wish to leave early will be severance packages accordingly.

According to the report from Economic Times, Tata Group has informed the India government about its plans to shut down the wireless business and will initiate the process by November. The representatives of TTSL met the officials of Department of Telecommunications to discuss the options for surrendering their existing spectrum holdings back to the government.

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