Published: Thu, October 12, 2017
Research | By Jo Caldwell

Tata Tele to merge with Bharti Airtel

Tata Tele to merge with Bharti Airtel

"The merger is being done on a debt-free cash-free basis, except for Bharti Airtel assuming a small portion of the unpaid spectrum liability of Tata's towards the Department of Telecom, which is to be paid on deferred basis", the statements said. The new entrant Reliance Jio has fast grown to 130 million customers since its launch past year.

Buying Tata Teleservices in a cash-less deal indicates the ability of Sunil Mittal and his team at Bharti Airtel.

Mumbai: Bharti Airtel Ltd is acquiring the Tata conglomerate's consumer mobile business virtually free of charge in a deal that gives India's top wireless player a major subscriber base boost, while stemming the bleed for Tata from a money-losing venture.

On Monday, Chandrasekaran had admitted to news outlet CNBC's local associate that the group's mobile business was in a "really bad shape", struggling under a huge debt pile.

Tata Group, which is known for doing business transparently, could not manage telecom regulatory policies of several decision makers in the recent governments.

As per the deal, all customers and assets of Tata CMB will be transferred to Airtel, and it also means that Airtel's current spectrum holdings will get a significant push: addition of 178.5 MHz spectrum (of which 71.3 MHz is liberalized) across the 850, 1800 and 2100 MHz bands. In the consolidation phase, only the biggest telecom companies would be able to survive in the market. Tata Group's telecom arms - both Tata Tele (TTSL) and Tata Teleservices Maharashrta (TTML) will now be merged with Bharti airtel.

Earlier in the week, Chandrasekaran had said that Tata Teleservices was in a really "bad shape" and in a debt of Rs 31,000 crore.

"We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders", he said in the statement. As part of the merger, Airtel will absorb Tata's consumer mobile business operations across the country in nineteen circles (17 under TTSL and 2 under TTML).

Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, that will be value accretive for both the groups.

"This deal will bring in more stability for Airtel. It's also a big positive for Airtel as they will have to pay less for the spectrum they are gaining", said Sanjiv Bhasin, an executive vice president at financial services firm IIFL.

Tata will retain its stake in tower company Viom, and will take care of the liabilities associated with it, according to the statement.

NTT Docomo would not have exited from India if Tata Teleservices was a profit making business and did not put pressure on its financials in Japan. But if Vodafone and Idea Cellular merger goes through then Airtel will drop down to the second spot.

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