Bharti Airtel To Acquire Tata's Money-Losing Mobile Unit For Nothing

Bharti Airtel To Acquire Tata's Money-Losing Mobile Unit For Nothing

The merger will be executed 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 a deferred basis, according to the news release. Reliance Jio was able to grow its subscriber count to 128 million in just a year.

Bharti Airtel also stands to gain from the acquisition of Tata Tele, as it will get an instant boost in the size of its customer base.

As part of the agreement, Bharti Airtel will absorb Tata CMB's operations in 19 telecom circles (17 under TTSL and 2 under TTML).

The news of acquisition comes amid media reports that Tata Group is mulling to shut down Tata Teleservices, which would have left its more than 5,000 employees unemployed.

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

Indian telecom giant Bharti Airtel is to acquire rival Tata Teleservices's struggling mobile business, the companies said Thursday, the latest move towards consolidation in the country's hyper-competitive phone market. According to the contract, both the companies agreed that all the debt would be paid off by Tata Teleservices and not Bharti Airtel.


As of end-March, Tata Teleservices and its unit had combined debt of Rs 34,089 crore ($5.24 billion) excluding sums due to the government for spectrum purchases, according to local ratings agency Crisil, which also said Tata Teleservices' net loss almost doubled in the year to March, to Rs 4,617 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. The Boards of Tata Sons, TTSL and TTML, too, have given their approval.

Goldman Sachs (India) Securities Pvt Ltd acted as financial adviser to Tata.

In February, Airtel absorbed Telenor's operations in seven circles - Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam in a similar no cash deal. This would help Airtel in bolstering its air-wave strength as well as narrow the gap between the proposed Vodafone-Idea merger in terms of subscriber as well as revenue market share. Having said that, Tata will retain its stake in Viom while taking care of all the liabilities associated with it.

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

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".

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