With this merger, 40 million Tata Tele customers would be added to Bharti Airtel's user base.
As part of the agreement, Bharti Airtel
would absorb Tata Tele’s operations across the country in 19 circles (17 under TTSL and two under TTML), Bharti Airtel
said in a release.
Speaking about consolidation in India’s telecom
sector, Bharti Airtel
Chairman Sunil Mittal said: “This is a significant development. It reinforces our commitment to leading India’s digital revolution by offering world-class telecom
services. On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as network side, and further strengthen our market position in several key circles.”
N Chandrasekaran, chairman of Tata Sons, the holding company of Tata group, of which Tata Tele is a part, said: “We believe today's agreement is the best and most optimal solution for Tata Group and its stakeholders. 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.”
Since the proposed merger would include the transfer of all customers and assets to Bharti Airtel, it would not only augment Bharti Airtel’s overall customer base but also strengthen its network. It will also enable Bharti Airtel
to further bolster its spectrum footprint, with the addition of 178.5 MHz spectrum (of which 71.3 MHz is liberalised) in the 850, 1800 & 2100-MHz bands. Bharti Airtel
said it would ensure quality services to Tata customers while offering them the added benefits of its innovative product portfolio, access to superior voice & data services, mobile banking, VAS and domestic/ international roaming facilities. Tata's operations and services would continue as normal until the completion of the transaction.
The transaction will also provide Bharti Airtel
an indefeasible right to use (IRU) for part of the existing fibre network of Tata. The merger is being done on a debt-free cash-free basis, except that Bharti Airtel
would assuming a small portion of the unpaid spectrum liability of Tata towards DoT, which is to be paid on a deferred basis.
“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,” Mittal added.
The Indian telecom
sector is in the midst of a wave of consolidation after the entry of Reliance Industries', Reliance Jio Infocomm venture.
Reliance Jio, backed by Mukesh Ambani, has sparked a price war and cut-throat competition in the space, eroding profits for carriers at a time when they already have high debt levels after costly airwave purchases.
"Tata and Bharti Airtel
will work together to further explore other mutual areas of cooperation," the companies
The statement also said Tata is in the initial stages of exploring a combination of its enterprise business with Tata Communications Ltd and its retail fixed-line and broadband business with satellite TV arm Tata Sky.
Tata will retain its stake in tower company Viom, and will take care of the liabilities associated with it, according to the statement. Goldman Sachs advised Tata on the deal.