Bharti Airtlel Ltd, India’s largest mobile-phone operator, has agreed to acquire the consumer telecom business of the diversified Tata Group, the companies said in a joint statement.
The development marks another consolidation in a sector that has been going through a turbulent period ever since billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd started operations a year ago.
The proposed deal will include the transfer of 40 million customers and assets of Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharashtra Ltd (TTML) to Bharti Airtel on a “debt-free cash-free” basis, the statement said. It didn’t elaborate.
Bharti Airtel will absorb the operations of TTSL and TTML across the country in 19 telecom service areas, it added.
“We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders,” said N Chandrasekaran, chairman, Tata Sons.
Bharti Airtel chairman Sunil Bharti Mittal said this is a significant development toward further consolidation in the Indian mobile industry.
The pace of consolidation has accelerated after Reliance Jio launched a price war late last year. This had prompted Bharti Airtel to acquire the Indian business of Norway’s Telenor ASA earlier this year and Vodafone Group Plc’s India unit to merge with Aditya Birla Group company Idea Cellular Ltd.
The acquisition is subject to requisite regulatory approvals, the statement said.
Impact on other allied Tata businesses
Tata consumer telecom business operations and services will continue as normal until the completion of the transaction, the statement said. The employees of Tata will be demerged on the lines of the two businesses – consumer telecom business and enterprise and fixed line and broadband (EFL).
Tata is also in initial stages of exploring a combination of its enterprise business with its larger telecommunications firm Tata Communications and its retail fixed line and broadband business with its direct to home (DTH) provider Tata Sky. However, any such transaction will be subject to boards’ and other requisite approvals, it said.
Tata will retain its stake in telecom tower firm Viom Networks Ltd, and will take care of the liabilities associated with it, the statement said.
Bharti Airtel on a spectrum buying spree
This acquisition will help Bharti Airtel bolster its strong spectrum footprint with the addition of 178.5 MHz spectrum. Of this, 71.3 MHz is liberalised in the 850, 1800 and 2100 MHz bands.
The company will offer the customers of Tata added benefits of its innovative product portfolio, access to superior voice and data services, mobile banking, VAS and domestic/international roaming facilities.
The transaction will also provide Bharti Airtel with an indefeasible right to use (IRU) for part of the existing fibre network of Tata.
The statement also said Tata and Bharti Airtel will work together to explore other mutual areas of cooperation that will be value accretive for both the groups.
“The acquisition of additional spectrum made an attractive business proposition. It will strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies," said Mittal.
In April last year, Bharti Airtel signed a Rs 3,500-crore ($525 million) spectrum trading deal with smaller rival Aircel Ltd to expand its fourth-generation (4G) mobile-phone services across India.
Within a month, Airtel inked a Rs 4,428-crore ($660 million) spectrum trading deal for six telecom service areas with Videocon Telecommunications Ltd. The Videocon deal had come just hours after Idea Cellular Ltd scrapping a similar but smaller pact with the same operator.