Bharti Airtel All Set to Acquire Tata Teleservices' Mobile Business

Bharti Airtel All Set to Acquire Tata Teleservices' Mobile Business

Tata Group's telecom arms - both Tata Tele (TTSL) and Tata Teleservices Maharashrta (TTML) will now be merged with Bharti airtel.

In a joint statement the pair said Bharti would take on Tata's 40 million subscribers, boosting its customer base, and add network coverage as it tries to fend off the rise of Reliance Jio, owned by India's richest man.

Airtel, however, will have to assume a portion of Tata's unpaid spectrum payment liability, which is estimated to be Rs 2,000 crore, but has to be paid on a deferred basis.

Buying Tata Teleservices in a cash-less deal indicates the ability of Sunil Mittal and his team at Bharti Airtel. N Chandrasekaran, who built the $17.5 billion Tata Consultancy Services (TCS), knows what TTSL can be in the next 10 years under the fold of Tata Sons without additional investment programs. For Bharti Airtel, it's a chance to acquire Tata Teleservices' infrastructure and customers.

TTSL and TTML employees in the 19 circles, managing the consumer mobile business, along with 178.5 MHz of spectrum across 800, 1800, 2100 Mhz (3G, 4G) bands would be transferred to Airtel.

"This is a good deal for Airtel and enables them to potentially become very strong and dominant player in data services market", said GV Giri of IIFL.

"Tata Teleservices has built a powerful asset, serving enterprise customers in the fast growing Indian market. we believe that it would be a good fit for Tata Communications and its customers and help to strenghthen Tata Communications' leadership position in the segment", said the Tata Group firm in a statement on BSE. Finding the right home for our longstanding customers and our employees has been the priority for us. The whole merge deal has been finalized after Tata Sons, TTNL and TTSL have approved of the decision.

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 transaction will also provide Bharti Airtel with an indefeasible right to use (IRU) for part of the existing fibre network of Tata", said a statement from the Tata group.

Tata is also in the initial stages of exploring a combination of its enterprise business with Tata Communications and its retail fixed line and broadband business with Tata Sky. Tata CMB's operations and services will continue as normal until the completion of the transaction, and it will retain retain its stake in Viom.

The companies said the deal is on a no-debt, no-cash basis, implying Airtel is not taking over any of the about Rs 40,000 crore debt with Tata Teleservices and is neither paying any cash.

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.