Airtel is buying Tata Teleservices’ mobile phone business and not enterprise and fixed line business without spending any cash or assuming any debt of the loss making TTSL. Airtel acquired Telenor in a similar deal.
Bharti Airtel will be assuming a small portion of the unpaid spectrum liability of Tata’s towards the DoT. Airtel said it will be making the balance spectrum liability on deferred basis.
The transaction indicates that there will be job cut at Tata Teleservices because Airtel will be buying only the mobile business of TTSL.
Airtel has 281 million subscribers across India. Tata Teleservices has nearly 41 million users in select circles.
Bharti Airtel will absorb Tata Teleservices and Tata Teleservices Maharashtra’s mobile operations across the country in nineteen circles (17 under TTSL and 2 under TTML). These circles represent bulk of India’s population and customer base.
Past deals
Earlier, Airtel, a company promoted by Sunil Mittal, acquired Telenor India, 4G spectrum from both Aircel and Videocon and 4G operator Tikona Digital Networks.
Reliance Communications and Aircel are also looking for suitors to come out of the present financial situations.
The consolidation in the mobile service provider space will also assist Airtel to enhance revenue market share in the Indian telecom market and face competition from Mukesh Ambani promoted Reliance Jio.
Vodafone and Idea Cellular are in the process of combining their telecom business in India as part of their strategy to become the largest telecom operator in India with significant cost savings.
“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,” said Sunil Bharti Mittal, chairman of Bharti Airtel.
The deal with Tata group will also enable Bharti Airtel to further bolster its 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.
The transaction will also provide Bharti Airtel with an indefeasible right to use (IRU) for part of the existing fibre network of Tata.
The employees of Tata will be demerged on the lines of the businesses i.e. CMB and EFL (Enterprise and Fixed Line and Broadband), and post an optimal manpower planning will be moved accordingly.
Tata is in initial stages of exploring combination of its Enterprise Business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky.
Tata will retain its stake in Viom, and will take care of the liabilities associated with it.
N Chandrasekaran, chairman of Tata Sons, said: “We have evaluated multiple options and are pleased to have this agreement with Bharti Airtel.”