Tatas to invest Rs 5,000 cr in telecom

Concerned over the health of their telecom business, the Tata group has planned an investment of Rs 5,000 crore (Rs 50 billion) over the next 2-3 years while expecting the telecom ventures to come to the big league by around 2008.

The Tata group, having three major players VSNL, Tata Teleservices Ltd and Tata Teleservices (Maharashtra) Ltd in its stable, has identified telecom as ''the main thrust area'' and projects a Rs 5,000 crore investment for spreading the services, building network and providing handsets, etc.

''The telecom business is not doing well. While VSNL is making profit, the other two are not. We will see that they join the other Tata group companies in maintaining better performance,'' Dr J J Irani, director, Tata Sons said in Kolkata.

The group has already invested around Rs 5,000 crore on its telecom projects, including the acquisition of VSNL, he said.

A late starter in the high growth segment, the Tatas are currently in a phase of spreading its services across India and has crossed six million customer base, adding one million new customers every other month.

''Telecom is a business where you have to first establish a wide presence before the revenue flow starts. We were a late starter, but have now covered all the regions except the northeast sector,'' Irani said.

Stating that ''another Rs 5,000 crore will go into the telecom sector,'' Irani said ''we expect TTSL and TTML to turnaround by 2-3 years''.

By 2010, Irani said, ''The telecom should join the big league of Tata Steel, TCS and Tata Motors'' -- the top three profitable entities of the Tata group.

The Tatas, which also had a joint venture with the Birlas in cellular services provider IDEA, were confident of the success of TTSL, providing cellular services under the Indicom brand, and the CDMA technology in mobile telephony in the long run.

''We think, CDMA is the future technology,'' Irani said adding the TTSL, which was incurring heavy losses, should tide over gradually in coming years.

About TTML, which operates in the Maharashtra circle, was in a comparatively better financial position hovering around the break-even, but was yet to establish as a profitable venture on sustained basis.

Asked about the proposed merger of TTSL and TTML, he said the plans were yet to be firmed up. However, in terms of their operations, the two companies were functioning almost like a single entity.