Telecom Consolidation : Tata Tele Merges With Bharti Airtel

Telecom Consolidation : Tata Tele Merges With Bharti Airtel

For Tata Telecom, it will be about exiting the consumer mobile segment, avoiding future investment requirements and potential further losses, it said, adding the headroom for Bharti's 'BBB-' rating improves slightly if the deal concludes in 2018, as leverage levels come down.

Tata's' wireless business after being acquired by Bharti Airtel and increasing their customer base to 321 million.

As part of the agreement, Bharti Airtel will absorb Tata CMB's operations in 19 telecom circles (17 under TTSL and 2 under TTML). The deal outlined on Thursday, dubbed "debt-free (and) cash-free", spares Tata Group the trouble of any potentially drastic restructuring of the money-losing operation.

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. He further said that on completion, the proposed acquisition will undergo seamless integration; both on the customer as well as the network side, and further strengthen our market position in several key circles. Other than paying a small part for the proportionate spectrum charges, Bharti will get Tata Tele's entire mobile business without assuming any additional debt. "It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders", he added.

"Finding the right home for our long-standing customers and our employees has been the priority for us. We have evaluated multiple options and are pleased to have this agreement with Bharti", Chandrasekaran said in the joint statement. Besides, partner NTT DoCoMo too made a decision to pull the plug from Tata Teleservices.

Goldman Sachs (India) Securities Private Limited is financial adviser to Tata. Besides, Airtel will have the right to use Tata's existing fibre network of Tata.

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The Tata Tele deal, coming on the heels of Airtel's buyout of Telenor India and an earlier spectrum trading deal with Aircel, will allow India's top phone company "to make it hard for Jio to continue with its disruptive pricing", Rajiv Sharma, HSBC director and telecom analyst, said in a note seen by ET.

The deal, however, excludes the Tata Group's stake in telecom towers firm Viom Networks Ltd. On merger, Airtel's subscriber base is expected to expand to 350 million as against the combined Idea-Vodafone's projected 390 million.

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

"The employees of Tata will be demerged on the lines of the two businesses ie CMB and EFL (Enterprise and Fixed Line and Broadband), and post an optimal manpower planning will be moved accordingly", it added.

We have been seeing a lot of changes and developments in India's telecom sector since last year, with the major one happening this year like the Vodafone-Idea merger.