Tata Group has made a decision to sell its troubled consumer telecom businesses to India's largest mobile services provider Bharti Airtel for an undisclosed sum, making it the latest casualty of the fierce competition in the country's telecommunications space. Idea has 191 million users as of August. So, if you were a Tata Docomo and Tata Photon customer, with the new merger, you now become an Airtel customer.
The deal, subject to regulatory approvals, will see over 40 million customers of Tata Teleservices (TTSL) and Tata Teleservices Maharashtra (TTML) joining Bharti Airtel and mark further consolidation in one of the world's largest telecom markets.
Pressure has been mounting on telecom companies since Reliance Industries' telecom arm emerged on the scene in September past year. It may also emerge as the preferred telecom partner for the Tata Group, executives said.
In March this year, Airtel's rivals - Vodafone India and Idea Cellular had announced merger plans to create India's largest telecom firm.
Bharti Airtel Ltd has signed a Rs 3,500-crore ($525 million) spectrum trading.
Bharti Airtel, which will be taking on Tata's Rs 10,000 crore spectrum liability, said the merger will bolster its spectrum in 1800, 2100 & 850 MHz bands, all widely used for 4G. He further said that 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.
Tata Sons Chairman N Chandrasekaran had recently conceded that the groups mobile business Tata Teleservices is in a "really bad shape" and that a "tough call" will have to be taken on the business in this financial year. Finding the right home for our longstanding customers and our employees has been the priority for us.
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. Goldman Sachs (India) Securities Pvt Ltd acted as financial adviser to Tata.
Telecom industry expert Nitin Sood also pointed out that Tata Tele would have gone through the deal despite any cash consideration since just shutting down the business would not have augured well on the brand image and would have left thousands of employees without employment.
Tata will retain its stake in the tower company Viom and will take care of the liabilities associated with it. As part of the merger, Airtel will absorb Tata's consumer mobile business operations across the country in nineteen circles (17 under TTSL and 2 under TTML).
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