Bharti Air­tel to scoop up Tata’s 40m mo­bile users in a ‘cash free’ deal


Bharti Air­tel Ltd surged the most since in five months yes­ter­day af­ter it an­nounced that it had agreed to ab­sorb Tata Group’s mo­bile-phone busi­ness in the lat­est among merg­ers shak­ing up one of the world’s most crowded wire­less mar­kets.

The stock gained as much as 9.2%, the most in­tra­day since May 10, af­ter In­dia’s largest mo­bile-phone op­er­a­tor said it will get Tata Te­le­ser­vices’ air­waves and 40 million cus­tomers in a “debt-free cash-free” merger. The shares were chang­ing hands at 430 ru­pees (219 baht), up 7.4%, at 1.18pm in Mumbai.

Tata will set­tle past li­a­bil­i­ties to pave the way for Bharti to com­plete what it de­scribed as an ef­fec­tively merger, ac­cord­ing to a state­ment is­sued on Thurs­day. Tata will fi­nalise the struc­ture of the deal with Bharti in the next five weeks, Tata Group chief fi­nan­cial of­fi­cer Sau­rabh Agrawal said in an in­ter­view on Thurs­day.

“The con­sid­er­a­tion we’re get­ting is that in­stead of clos­ing down the busi­ness, we are tak­ing care of ev­ery stake­holder,” said Mr Agrawal at Tata’s Mumbai head­quar­ters. “Frankly, this busi­ness should have been re­struc­tured a long time back. We lost the in­dus­try po­si­tion a while ago and we never re­cov­ered.”

The world’s sec­ond-big­gest mo­bile­phone mar­ket has long been ripe for an over­haul with al­most a dozen car­ri­ers vy­ing for cus­tomers with some of the low­est tar­iffs on the planet. Then Re­liance Jio In­fo­comm, con­trolled by In­dia’s rich­est man, roiled the in­dus­try by jump­ing into the fray last year with free calls for life and free data for a lim­ited pe­riod.

Bharti said it will as­sume some small li­a­bil­i­ties re­lated to spec­trum. Tata will re­tain its stake in Viom Net­works, a tower com­pany, and the group is ex­plor­ing merg­ing its en­ter­prise busi­ness with Tata Com­mu­ni­ca­tions, ac­cord­ing to the state­ment. Par­ent Tata Sons will re­pay all the debt that Tata Te­le­ser­vices has, Mr Agrawal said.

Tata Te­le­ser­vices was ranked ninth among In­dia’s 11 car­ri­ers, with a mar­ket share of 3.55% as of July, ac­cord­ing to the lat­est data from the na­tion’s tele­com reg­u­la­tor. The top three car­ri­ers — Bharti, Voda­fone In­dia and Idea Cel­lu­lar — con­trol al­most 60% of the mar­ket. Jio now has about 11% of the mar­ket, rank­ing it fourth.

Jio’s en­try into the mar­ket sparked the lat­est shake­out. In March, Voda­fone and Idea an­nounced that they would merge op­er­a­tions in In­dia to cre­ate the na­tion’s largest car­rier. In Fe­bru­ary, Te­lenor ASA said that it would sell its In­dia unit to cur­rent mar­ket leader Bharti. Re­liance Com­mu­ni­ca­tions had planned to merge with Air­cel but that deal fell apart in early Oc­to­ber.

The in­dus­try over­haul may be far from over.

“The tele­com sec­tor is un­der­go­ing a very tur­bu­lent and dif­fi­cult phase,” bil­lion­aire Ku­mar Man­galam Birla, the pa­tri­arch of the group that con­trols Idea, said in an in­ter­view in Oc­to­ber. “Prob­a­bly the fittest three will sur­vive.”

The prom­ise of more than a bil­lion cus­tomers led In­dian com­pa­nies to flood the wire­less in­dus­try but as growth slowed, their debt-fu­elled ex­pan­sion be­gan catch­ing up with them. As of March 31, In­dian wire­less oper­a­tors had a com­bined debt of about 4.6 tril­lion ru­pees, largely be­cause of ag­gres­sive bids for air­waves, ac­cord­ing to credit rat­ing agency ICRA.

“We’ll take the near term pain. To gulp down the poi­son. Fin­ish it off and re­solve it.” said Mr Agrawal. “We are triple A. We act as triple A and we will al­ways be triple A,” re­fer­ring to Tata Sons’ credit rat­ing.

A man packs goods on the back of his bi­cy­cle as he stands next to an ad­ver­tise­ment for Bharti Air­tel in the south­ern In­dian city of Kochi. Bharti Air­tel an­nounced on Thurs­day that it will get Tata Te­le­ser­vices’ air­waves in a “debt-free cash-free” merger.

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