Tata Teleservices to merge its Consumer Mobile Business into Airtel
Oct 12 2017 by Michele Stevens
The transaction will be done on a "debt-free cash-free" basis, the companies said in their joint statement, although Bharti Airtel will take over a "small portion" of Tata's unpaid spectrum liabilities.
Tata's' wireless business after being acquired by Bharti Airtel and increasing their customer base to 321 million.
Mumbai: In a relief to Tata Group's loss-making telecom business, Bharti Airtel will be absorbing Tata Tele's Consumer Mobile Business's (Tata CMB) operations across the country in 19 circles.
Tata Group, which is known for doing business transparently, could not manage telecom regulatory policies of several decision makers in the recent governments.
Bharti Airtel and the Tata Group have entered into an agreement to merge the Consumer Mobile Businesses (CMB) of Tata Teleservices Limited (TTSL) and Tata Teleservices Maharashtra Limited (TTML) into Airtel, the company informed the BSE.
India's telecoms market, with 1.2 billion mobile subscribers, is in the midst of a wave of consolidation as smaller debt-laden players seek exits after overspending in airwave auctions. Following which, Tata Teleservices customers will get access to the mobile banking and VAS services provided by Airtel, besides being ported onto Airtel's network.
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.
Commenting on the deal, N Chandrasekaran, Chairman of Tata Sons said, "We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders". TTSL and TTML's operations, across the nineteen circles (17 under TTSL and 2 under TTML) it is present in, will be absorbed by Airtel.
"It's evident disruption is picking up and consolidation is the game of the hour", he said, adding that he expects even more deals in the crowded sector. "It will gain additional customers and also spectrum", he added.
Goldman Sachs (India) Securities Private Limited is financial advisor to Tata.
In the span of a year, Reliance Jio has managed to corner 128.58 million customers and become the fourth largest telecom company by market share after Bharti Airtel, Vodafone and Idea Cellular.
Without giving the exact number of employees being transferred to Airtel, he admitted that the Sunil Bharti Mittal firm may look at optimisation of staff on ground after the merger. Tata will also retain its stake in Viom and will take care of the liabilities associated with it.
Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, noted Bharti Airtel in the news release.