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Tatas to merge telecom business with Bharti Airtel
12 October 2017, 10:27 | Dale Webster
Bharti Airtel, Tata to merge consumer mobile businesses
The spectrum costs are estimated around Rs 10,000 crore from which Bharti Airtel will be paying around Rs 1500 crore and Rs 8,500 crore will be paid by the Tata's to the Telecom Department.
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.
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.
Furthermore, this transaction also includes transfer of all the assets of Tata CMB to Airtel which would enable the latter to strengthen its footprint in the 850, 1800 and 2100 MHz bands.
Tata will retain its stake in Viom and take care of associated liabilities. The merger is on a debt-free cash-free basis. 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.
On the merger with Tata, Bharti Airtel Chairman, Sunil Mittal 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". The agreement will further strengthen Airtel's solid portfolio and create substantial long term value for our shareholders given the significant synergies.
According to Tata Sons Chairman N Chandrasekaran, it was a hard decision to merge. Finding the right home for our longstanding customers and our employees has been the priority for us. The team of Bharti Airtel is said to be discussing the deal internally and might announce it officially later today or tomorrow. Airtel has about 265 million customers in the country and the number will go up to 305 million after adding the 40 million customers of Tata Tele.
In its statement, Tata also said that it is in initial stages of exploring the opportunity of merging its Enterprise Business with Tata Communications, and, its Retail Fixed Line and Broadband business with Tata Sky. "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.
"While the fate of employees is not clear, the consideration that manpower planning will be done based on business lines is good".
Tata Teleservices, which has more than $5 billion of debt, has been mired in losses and it had been speculated that the group may opt to permanently shutter the operation.
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