Airtel will only take up a small portion of the unpaid spectrum liability of Tata Teleservices.
In further consolidation of the Indian telecom industry, Bharti Airtel on Thursday entered into an agreement to acquire the mobile operations of troubled Tata Teleservices on a no-debt, no-cash basis.
According to the release on the exchanges, Bharti Airtel will absorb Tata’s consumer mobile business in 19 circles (17 under TTSL and two under Tata Teleservices Maharashtra Limited) and assume a small portion of the unpaid spectrum liability of Tata Teleservices.
“The acquisition of additional spectrum made an attractive business proposition. It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies,” Bharti Airtel chairman Sunil Bharti Mittal said after announcement of the deal.
The merger will add 40 million users to the already large user base of Bharti-Airtel, further strengthening its position as a market leader. The deal will also bolster Airtel’s spectrum pool with additional 178.5 MHz spectrum in 1800, 2100 and 850 MHz bands, which it will receive from Tata as part of the deal.
On the other hand, the merger helps Tata group to exit the loss-making mobile telephone business without disrupting services to its customers and rendering its employees jobless.
As the deal has been made on a no-debt, no-cash basis, Bharti Airtel has virtually got Tata Teleservices in a platter. According the the agreement, Airtel will not take any of the about Rs 40,000 crore debt with Tata Teleservices and neither pay any cash. Airtel will only have to pay 15-20 percent of the deferred payment for spectrums. That comes to around Rs 1500-2000 crore.
“We believe today’s agreement is the best and most optimal solution for the Tata Group and its stakeholders. Finding the right home for our longstanding customers and our employees has been the priority for us. We have evaluated multiple options and are pleased to have this agreement with Bharti,” Tata Son’s chairman, N Chandrasekaran said.
Airtel’s accusation of Tata Teleservices adds to the series of mergers that have taken place in the last few months due to the entry of Reliance Jio into the telecom landscape.