Bharti acquires Tatas’ mobile arm
The country’s largest operator Bharti Airtel on Thursday said it would acquire the loss-making consumer mobile business of the Tata Group on a ‘debtfree, cash-free’ basis, while taking on some spectrum-related cost. The deal, which is Bharti Airtel’s seventh acquisition in the past five years, will entail the operator paying a “small portion” of unpaid spectrum liability of the Tatas, estimated at ₹2,000 crore.
All past liabilities and dues would be settled by the Tatas, the companies said in a joint statement, adding that Airtel would acquire 40 million subscribers of Tata Teleservices Ltd. and Tata Teleservices Maharashtra Ltd. across 19 circles. “These circles represent the bulk of India’s population and customer base,” the statement said.
Tata Teleservices has a debt of about ₹31,000 crore. The proposed merger will include transfer of all the customers and assets of the Tatas’ consumer mobile business to Bharti Airtel. “It will also enable Bharti Airtel to further bolster its strong spectrum footprint with the addition of 178.5 MHz spectrum (of which 71.3 MHz is liberalised) in the 850, 1800 & 2100 MHz bands,” the statement added.
The deal is likely to help Bharti Airtel narrow the gap with the Vodafone-Idea combined entity that would have about 400 million customers once the merger is concluded.
Bharti Airtel, which is also in the process of acquiring the India operations of Norway’s Telenor, has about 300 million subscribers with a market share of about 24%. The Bharti Airtel-Tata’s CMB combined entity is likely to have a market share of about 27-28%, against the estimated 34% of the Vodafone-Idea combined entity. The deal will also help the firm widen its lead over the Mukesh Ambani-led Reliance Jio.
Mahesh Uppal, Director at telecom consulting firm ComFirst said, “Airtel certainly has got a bargain. Tata’s options were limited. They were losing money and were faring badly on market share as well as revenues. Airtel gets their subscribers and their spectrum. I think Airtel would be helped incrementally.”
Earlier this week, in an interview to a TV channel, Tata Sons Chairman N. Chandrasekaran had admitted that the mobile consumer business is “really in bad shape” and “close to impossible for us to be able to recover. So that is a company that we have got to find a solution for very quickly.”
Tata CMB’s operations and services will continue as normal until the completion of the transaction, the companies said, adding that the deal was subject to regulatory approvals.