Published: Thu, October 12, 2017
Research | By Raquel Erickson

Tata Tele to merge with Bharti Airtel

Tata Tele to merge with Bharti Airtel

Tata Teleservices and its unit Tata Teleservices (Maharashtra) have more than 40 million subscribers and rank ninth in India's telecoms market, which had a total of 1.2 billion mobile subscriptions at the end of July. "The customers of Tata will be able to enjoy India's widest and fastest voice & data network, and bouquet of Airtel's best-in-class products and services", he said.

Bharti Airtel, which already is at over 31o million mobile phone subscriptions with the acquisition of another smaller rival Telenor India, will have a total 350 million users with those of Tata Tele. TTSL and TTML's operations, across the nineteen circles (17 under TTSL and 2 under TTML) it is present in, will be absorbed by Airtel. That comes to around Rs 1500-2000 crore. Revenues, meanwhile were down 10 per cent to under Rs 10,000 crore. The merger will be debt-free and cash-free, which implies that Airtel won't be adding any significant liabilities in the deal.

"It has bank guarantees of Rs 3,700 crore submitted with DoT".

As of end-March, Tata Teleservices and its unit had combined debt of Rs 34,089 crore ($5.24 billion) excluding sums due to the government for spectrum purchases, according to local ratings agency Crisil, which also said Tata Teleservices' net loss almost doubled in the year to March, to Rs 4,617 crore.

A Bharti Airtel office building is pictured in Gurugram, previously known as Gurgaon, on the outskirts of New Delhi, India April 21, 2016.

"We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders", said N Chandrasekaran, Chairman of Tata Sons. Finding the right home for our longstanding customers and our employees has been the priority for us.

"We have evaluated multiple options and are pleased to have this agreement with Bharti", he added.

The merger will also provide Bharti Airtel the right to use Tata's existing fiber network.

Tata is also in initial stages of exploring combination of its enterprise business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky.

An official statement reads, "The Boards of Tata Sons, TTSL and TTML separately approved this transaction".

Tata will retain its stake in Viom and take care of associated liabilities.

Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, that will be value accretive for both the groups.

"This merger is pretty much in line with industry expectations".

Bharti Airtel will get additional 40 million customers out of this deal. "It's also a big positive for Airtel as they will have to pay less for the spectrum they are gaining", said Sanjiv Bhasin, an executive vice president at financial services firm IIFL.

In the span of a year, Reliance Jio has managed to corner 128.58 million customers and become the fourth largest telecom company by market share after Bharti Airtel, Vodafone and Idea Cellular.

Agrawal, who in July joined Tatas from Aditya Birla Group, said closing down the business would have been against the ethos of Tata Group and would have rendered employees jobless.

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