Tata Teleservices to merge its Consumer Mobile Business with Bharti Airtel

Audrey Hill
October 14, 2017

Tata Teleservices Limited (TTSL) and Tata Teleservices Maharashtra Limited (TTML) that are together referred to as Tata have announced that they are merging their Consumer Mobile Business (Tata CMB) with Airtel.

With a subscriber base of 44 million and revenue market share (RMS) of five per cent at June quarter-end, Tata is selling the mobile business to India's largest telecom operator nearly for free as part of the chairman's plan to exit operations which had been a prolonged drag on group profitability.

The agreement still requires regulatory approvals, but will see Tata settling its debts and liabilities while Airtel will absorb all Tata consumer mobile operations - Tata Teleservices and Tata Maharashtra - including assets and subscribers.

Brokerages have turned positive on Bharti Airtel and upgraded their stance from sell to buy as the acquisition of Tata Tele's wireless business is expected to boost the Sunil Mittal-led telco's overall cost position and spectrum portfolio and help defend its margins and cashflows against Reliance Jio, analysts said. Tata said it is also exploring a combination of its Enterprise Business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky.

"This is a significant development towards further consolidation in the Indian mobile industry. The customers of Tata will be able to enjoy India's widest and fastest voice and data network, and bouquet of Airtel's best-in-class products and services", he said.

"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", states the agreement.

N Chandrasekaran, Chairman of Tata Sons commenting on the deal says, "We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders".

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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.

Tata Teleservices is one of the most awarded that includes Tata Docomo and Tata Photon.

Goldman Sachs (India) Securities Private Limited is financial adviser to Tata.

Airtel will have the right to use Tata Telecom's fibre network.

The deal, however, excludes the Tata Group's stake in telecom towers firm Viom Networks Ltd. But the addition of another 40 million users will not assist Airtel to continue as the number one telecom operator post the completion of Idea-Vodafone deal.

"While the fate of employees is not clear, the consideration that manpower planning will be done based on business lines is good". Vodafone and Idea, Bharti's immediate rivals, are also about to seal-off a merger.

Other reports by MaliBehiribAe

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