Tata Sons May Inject Capital into Tata Tele as AGR Dues Exceed ₹19,000 Crore

Tata Sons Ltd, the holding company of the $150 billion Tata Group, may be compelled to inject fresh capital into its loss-making telecom subsidiary, Tata Teleservices Ltd (TTSL), due to mounting financial pressures. The telecom unit is grappling with adjusted gross revenue (AGR) and other dues owed to the Indian government amounting to approximately Rs 19,256 crore as of March 2025. This financial burden is compounded by TTSL’s negative net worth of Rs 17,876 crore and significant accumulated losses, which have left the company unable to meet its financial obligations without external support.

Sources familiar with the matter reveal that Tata Sons has issued a letter of comfort to Tata Teleservices, signaling its commitment to support payment obligations arising from these dues. The letter acts as a financial assurance, although the telecom firm’s ability to generate cash flow remains constrained.

The ongoing AGR dues issue is rooted in a Supreme Court judgment that held telecom companies liable to pay adjusted gross revenue dues, including interest and penalties, to the government. On a recent development, the Supreme Court dismissed petitions from major telecom operators — Vodafone Idea (Vi), Bharti Airtel, and Tata Teleservices — that sought a waiver or relief on these longstanding AGR dues. These companies were requesting exemptions on payment of interest, penalties, and interest on penalties. However, the court left the door open for the government to provide any relief measures it deems fit to the telecom sector.

In the backdrop of these legal developments, rating agency Care Ratings flagged the risks associated with AGR liabilities. In June 2024, Care Ratings highlighted the potential financial strain Tata Teleservices could face following the expiration of a four-year moratorium on AGR payments in March 2026. This moratorium had offered temporary relief by deferring payments, which Tata Teleservices had availed through the Department of Telecommunications’ telecom relief package initiated in October 2021.

Historically, Tata Sons has shown its willingness to support the telecom business financially. The company had infused Rs 46,595 crore into Tata Tele Business Services (TTBS) up until June 2019. It continued to provide assurances through support letters that it would take necessary financial steps to manage liquidity shortfalls within 12 months from the balance sheet date. By 31 March 2024, Tata Teleservices recognized the full liability, including accrued interest, as deferred payment obligations under borrowings.

As per the rating agency, the dues were approximately Rs 17,830 crore as of March 2024, split between Rs 3,367 crore under Tata Teleservices Maharashtra Ltd (TTML) and Rs 14,463 crore under Tata Teleservices Ltd (TTSL). These dues have since escalated to Rs 19,256 crore by March 2025.

This situation highlights the persistent financial challenges faced by India’s telecom sector, despite ongoing reforms aimed at providing some respite. The sector continues to endure a difficult operating environment, marked by high debt levels and regulatory pressures.

According to Tata Teleservices’ annual report for the fiscal year 2025, the company reported a net loss of Rs 994 crore on revenues of Rs 3,626 crore. Despite these challenges, Tata Sons has maintained its commitment to the telecom business. After Tata Teleservices sold its wireless telephony business to Bharti Airtel, Tata Sons cleared all outstanding bank loans of the telecom company and reacquired the stake of its former equity partner, NTT Docomo. These actions have helped maintain Tata Sons’ strong track record of honoring financial obligations.

Overall, Tata Teleservices’ financial health remains fragile due to AGR liabilities and accumulated losses, necessitating continued financial support from Tata Sons to navigate the turbulent telecom sector landscape in India.