Tata, Bharti plan consumer mobile business merger

by Wade Massey October 14, 2017, 0:10
Tata, Bharti plan consumer mobile business merger

Shares of Bharti Airtel on Friday closed with up to 8 per cent gains as the company announced acquisition of Tata group's loss-making mobile telephony business, nearly for free, boosting its spectrum holding and user base.

The deal will allow Airtel to acquire 40 million subscribers of Tata Teleservices Ltd (TTSL) and Tata Maharashtra Ltd (TTML) across 19 circles, which represent bulk of country's population and customer base, according to a statement released by both the companies. All past liabilities will be settled by Tata, and BTL will assume a small portion of the unpaid spectrum liability of Tata.

Financial services firm UBS said that near-term earnings downside notwithstanding, it saw Bharti Airtel as a key long term victor given its scale, spectrum footprint and network headstart. The latest announcement will see over 4 crore Tata customers join Bharti Airtel.

Fitch Ratings believe Bharti Airtel - Tata telecom business deal is positive for not only participants but also for the industry as a whole.

Tata Telecom will retain its enterprise business, retail fixed-line and broadband businesses, along with its stake in tower operator Viom Networks.

The acquisition is subject to requisite regulatory approvals, the statement said without revealing the acquisition amount.

As of end-March, Tata Teleservices and its unit had combined debt of Rs 34,000 crore excluding spectrum liabilities. The Boards of Bharti Airtel, Tata Sons, TTSL and TTML have approved the transaction. It will strengthen Airtel's position as compared to Jio, as the former will get access to 178.5 MHz spectrum (of which 71.3 MHz is "free to trade") in the 850 MHz, 1,800 MHz and 2,100MHz bands.

"The benefits from additional spectrum, fibre assets and subscribers will more than offset the additional spectrum liabilities". "It will further strengthen our already solid portfolio and create substantial long term value for our shareholders given the significant synergies", Mittal added.

However, N Chandrasekaran, Chairman, Tata Sons said it was a most optimal solution. Tata CMB's operations and services will continue as normal until the completion of the transaction. "We have enhanced multiple options and are pleased to have this agreement with Bharti", he added.

Mathews indicated that with this deal three big telecom players have emerged in the industry - Airtel-TTSL, Vodafone-Idea and Reliance Jio.

The Indian unit of Britain's Vodafone Group PLC and Idea Cellular Ltd, the country's second and third biggest telecoms firms respectively, have won antitrust approval to merge. "While the fate of employees is not clear, the consideration that manpower planning will be done based on business lines is good".

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