Tatas to merge telecom business with Bharti Airtel

Cheryl Sanders
October 13, 2017

The acquisition will be on a cash-free debt-free basis. Although the acquisition will be done on a debt-free cash-free basis, but this still marks one of the biggest deals in Indian telecom history and also Tata's unceremonious exit from mobile business.

This follows India's largest telecom operator Bharti Airtel announcing that the consumer mobile business of (CMB) of Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharashtra Ltd (TTML) s will merge with it on a cash-free, debt-free deal. "Finding the right home for our longstanding customers and our employees has been the priority for us", Tata Sons chairman N Chandrasekaran said.

"This is a significant development towards further consolidation in the Indian mobile industry and reinforces our commitment to lead India's digital revolution by offering world-class and affordable telecom services through a robust technology and solid spectrum portfolio".

Bharti Airtel will acquire Tata Group's loss-making mobile telephony business, nearly for free, boosting its spectrum holding and raising subscriber base while saving the Tatas from the prospect of having to shut down the struggling unit.

It is, however, believed that the deal marks the beginning of a growing relationship between the two corporates which could span businesses such as DTH, enterprise and undersea cable.

Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, that will be value accretive for both the groups. The sale of the ailing consumer mobile services is the second major transaction during Chandrasekaran's leadership of Tata Sons. Once Vodafone merges with Idea, they will be the leader in the telecom business.

Tata Teleservices will continue operation as usual till the transaction is completed. With synergies between Tata Communications and Airtel, the two companies could create capacity for almost twice the number of customers that they are now serving, officials add.

The strategy overall is part of Tata Groups plan to find a solution for the troubled mobile business of the conglomerate. Tata Group had previously also explored option of shutting down the unit.

The Bharti Airtel-Tata Tele combined entity would also have a share of around 40 per cent in the total telecom revenues, which will be just behind the projected 44 per cent for the Idea-Vodafone combine. In the past, the group is understood to have held talks with Vodafone for a possible deal.

Arvind Singhal, chairman of retail consultancy Technopak Advisors, said: "Tata Teleservices in any case has hardly been doing much in the past few years and has been a loss-making proposition".

Only in March, the Tata group and Japan's NTT Docomo finally resolved a row over a foundering telecom venture. "We would look to acquire more to scale up the scope and size of the operations", said Saurabh Agrawal, Group CFO, Tata.

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