Air­tel to buy Tata Tele in debt-free, cash-free deal

Hindustan Times (Chandigarh) - - HINDUSTANTIMES HTNATION -

the coun­try in 19 cir­cles (17 un­der Tata Te­le­ser­vices and two un­der TTML). Th­ese cir­cles rep­re­sent the bulk of In­dia’s pop­u­la­tion and mo­bile cus­tomer base.

Tata Te­le­ser­vices had a sub­scriber base of 44 mil­lion and rev­enue mar­ket share (RMS) of 5% at the end of the June quar­ter, ac­cord­ing to Gold­man Sachs. With the merger, Air­tel’s over­all sub­scriber base is now ex­pected to in­crease to as much as 351 mil­lion as against the com­bined Voda­fone-idea’s pro­jected 391 mil­lion con­sumer base.

Air­tel’s RMS will also rise to more than 40% from 35.6% in Septem­ber, a tad short of the com­bined 42% RMS of Voda­fone-idea. Tata’s av­er­age rev­enue per user stood at Rs159/month, lower than that of Air­tel and Voda­fone, but higher than Idea’s.

The ac­qui­si­tion will also bol­ster Air­tel’s po­si­tion vis-a-vis Re­liance Jio, as Air­tel will get ac­cess to 178.5 mega­hertz (MHZ) spec­trum (of which 71.3MHZ is lib­er­al­ized or free to trade) in the 850MHZ , 1,800MHZ and 2,100MHZ bands, and help it strengthen its 4G cov­er­age.

“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,” Su­nil Bharti Mit­tal, chair­man of Air­tel, said in the state­ment.

“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,” Mit­tal added.

For Tata Sons chair­man N. Chan­drasekaran, the deal is in line with his strat­egy to do away with busi­nesses which are a drag on group prof­itabil­ity.

“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 long-stand­ing cus­tomers and our em­ploy­ees has been the pri­or­ity for us. We have eval­u­ated mul­ti­ple op­tions and are pleased to have this agree­ment with Bharti,” said Chan­drasekaran.

The em­ploy­ees of Tata Te­le­ser­vices and TTML will be di­vided on the lines of the two busi­nesses i.e. CMB (con­sumer mo­bile busi­ness) and EFL (En­ter­prise and Fixed Line and Broad­band), and, post an op­ti­mal man­power plan­ning, will be moved ac­cord­ingly.

Tata Sons is also in ini­tial stages of ex­plor­ing a com­bi­na­tion of the en­ter­prise busi­ness with Tata Com­mu­ni­ca­tions Ltd and its re­tail fixed line and broad­band busi­ness with Tata Sky. Any such trans­ac­tion will be sub­ject to re­spec­tive boards and other req­ui­site ap­provals, the com­pa­nies said in a state­ment.

“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 firms said in the state­ment.


Air­tel’s ac­qui­si­tion will help nar­row the gap between it and the Voda­fone­idea.

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