Tata Tele to merge consumer business with Bharti Airtel as Chandrasekaran offloads dragging telco
Days after Tata Sons Chairman N Chandrasekaran said he would take a tough call on the group’s struggling telecommunication business, Tata Teleservices has actually come under hammer, and the winner is Bharti Airtel — already the largest telecom services company in India. The proposed merger between the two is a result of a long and bloody battle that the Indian telecom companies have been fighting for survival after the entry of Reliance Jio into the landscape, with its dirt cheap tariff offers that led the others scrambling to keep their customer base.
The merger of Tata Teleservices’ consumer mobile business in 19 circles will add 40 million users to Bharti Airtel’s network, keeping the Sunil Mittal-company firmly in the race to protect its market leader status, even as its next biggest rivals Vodafone India and Idea Cellular threaten to topple it from the top spot when they combine later.
Bharti Airtel, which already is at over 31o million mobile phone subscriptions with the acquisition of another smaller rival Telenor India, will have a total 350 million users with those of Tata Tele. This will fall short of Vodafone-Idea’s combined 395 million users when those two companies’ merger comes through.
Further, the merger will also crucially add to Bharti Airtel’s 4G spectrum, by bolstering its spectrum pool with significant additional radio waves in 1800, 2100 and 850 MHz bands, the company said. “It (the merger) will… enable Bharti Airtel to further bolster its strong spectrum foot-print with the addition of 178.5 MHz spectrum (of which 71.3 MHz is liberalised) in the 850, 1800 & 2100 MHz bands,” Bharti Airtel said in a joint statement.
The merger of Tata Teleservices into Bharti Airtel will not result in any cash outgo from Bharti Airtel, the company said in a statement. “The merger is being done 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 DoT, which is to be paid on deferred basis,” it said.
Bharti Airtel Chairman Sunil Bharti Mittal said: “On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side, and further strengthen our market position in several key circles.” He added: “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.”
Tata Sons Chairman Chandra said: “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.”
On the other hand, along the lines of Tata Sons’ Chairman N Chandrasekaran’s vision to consolidate the group businesses into scalable or larger entities, the group is also in initial stages of exploring combining its enterprise business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky — the group’s DTH unit, Tata said in the statement. “Any such transaction will be subject to respective boards and other requisite approvals,” the statement said, adding, “Tata will retain its stake in Viom, and will take care of the liabilities associated with it.”