Air­tel to ac­quire Tata Tele on ‘no-debt, no-cash’ ba­sis

The Hitavada - - BUSINESS -

BHARTI Air­tel will ac­quire Tata Group’s loss-mak­ing mo­bile tele­phony busi­ness, al­most for free, boost­ing its spec­trum hold­ing and rais­ing sub­scriber base while sav­ing the Tatas from the prospect of hav­ing to shut down the strug­gling unit.

Air­tel, for whom it will be the 7th ac­qui­si­tion in five years, will from Novem­ber 1 take over 4 crore cus­tomers of Tata Te­le­ser­vices Ltd (TTSL) and Tata Te­le­ser­vices Ma­ha­rash­tra Ltd (TTML) in 19 tele­com cir­cles or zones on “a debt-free cash-free ba­sis”, the two groups an­nounced in sep­a­rate but iden­ti­cal press state­ments.

TTSL and TTML em­ploy­ees in the 19 cir­cles, man­ag­ing the con­sumer mo­bile busi­ness, along with 178.5 MHz of spec­trum across 800, 1800, 2100 Mhz (3G, 4G) bands would be trans­ferred to Air­tel. While all of the Rs 31,000 crore debt will re­main with the Tatas, Air­tel will as­sume pay­ment of close to 20 per cent of the Rs 9,000-10,000 crore de­ferred pay­ments for the spec­trum to the Govern­ment. Tatas will pay the rest. The tele­com sec­tor is in a con­sol­i­da­tion mode since the Septem­ber 2016 en­try of In­dia’s rich­est man Mukesh Am­bani’s Re­liance Jio, which has given in­cum­bent op­er­a­tors a run for their money through free voice call­ing and cheap data of­fers. Jio has gained 12.8 crore sub­scribers with in a year. In Fe­bru­ary, Air­tel ab­sorbed Te­lenor’s op­er­a­tions in seven cir­cles -- Andhra Pradesh, Bi­har, Ma­ha­rash­tra, Gu­jarat, UP (East), UP (West) and As­sam in a sim­i­lar no-cash deal.

Ear­lier this year, Voda­fone In­dia and Idea Cel­lu­lar agreed to merge their op­er­a­tions to cre­ate the coun­try's largest tele­com op­er­a­tor worth of more than USD 23 bil­lion (roughly Rs 1,51,153 crore) with 35 per cent mar­ket share.

With this deal, Air­tel will have over 32 crore cus­tomers, way be­low 40 crore users with the merged Voda­fone-Idea en­tity.

“In­stead of clos­ing down the con­sumer mo­bile busi­ness, which would have en­tailed a much higher cost and in­volved let­ting go of em­ploy­ees and ven­dors etc, we have cho­sen this route,” Tata Group Chief Fi­nan­cial Of­fi­cer, Sau­rabh Agrawal told PTI.

He said Tatas would re­tain stake in the tower com­pany, Viom, and ex­plore trans­fer­ring the en­ter­prise busi­ness to Tata Com­mu­ni­ca­tions and re­tail fixed­line and broad­band busi­ness to satel­lite TV arm Tata Sky.

The board of the two firms will eval­u­ate the op­por­tu­nity and de­cide in 4-6 weeks, he said.

The strug­gling mo­bile con­sumer busi­ness, Agrawal said, “should have been re­struc­tured long back” and when new group Chair­man N Chan­drasekaran took over in Fe­bru­ary, he reached out to peo­ple who could help out.

Agrawal, said clos­ing down the busi­ness would have been against the ethos of Tata Group and would have ren­dered em­ploy­ees job­less. Through this deal “Tatas have taken all the pain” as­so­ci­ated with the busi­ness and en­sure that busi­ness is not shut, em­ploy­ees not sacked and ven­dors and other trades as­so­ci­ated with it are not thrown out of busi­ness, he said.

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