Tatas to sell consumer mobile business to Airtel for 'free'
12 October 2017, 10:26 | Justin Tyler
Bharti Airtel, Tata to merge consumer mobile businesses
In March, British mobile behemoth Vodafone announced the merger of its India unit with Idea Cellular in a long-expected move that saw it overtake Bharti as the South Asian nation's largest telecoms operator. But the biggest benefit that Airtel would derive is access to Tata's 178.5 MHz spectrum bands spread across 19 circles.
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.
The merger will be on a debt-free, cash-free basis and all past liabilities and dues to be settled by Tata, the companies said in a statement.
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. 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.
"We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders", said Chandrasekaran. Finding the right home for our longstanding customers and our employees has been the priority for us. Airtel will also get an indefeasible right to use (IRU) a part of Tata's existing fibre network. "We have evaluated multiple options and are pleased to have this agreement with Bharti", said Tata Sons chairman, N Chandrasekaran.
A Bharti Airtel office building is pictured in Gurugram, previously known as Gurgaon, on the outskirts of New Delhi, India April 21, 2016.
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 statement said.
Tata is also in initial stages of exploring combination of its enterprise business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky. Reports state that the acquisition is subject to requisite regulatory approvals, the statement said without revealing the acquisition amount.
Mathews indicated that with this deal three big telecom players have emerged in the industry - Airtel-TTSL, Vodafone-Idea and Reliance Jio. Tata will retain its stake in Viom and take care of associated liabilities - American Tower Company (ATC) owns 51 per cent stake in Viom while Tata Tele holds 33 per cent and Tata Sons 2 per cent. Airtel did this earlier when it acquired Telenor and its 40 million mobile phone customers in select circles along with valuable spectrum.
"While the fate of employees is not clear, the consideration that manpower planning will be done based on business lines is good".
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