MUMBAI: In a significant move, the country’s largest telecom company Bharti Airtel Ltd will take over Tata Teleservices, the struggling mobile services business of Tata group. The ‘debt-free, cash-free’ merger gives spectrum and customer muscle to Airtel to counter competition from Reliance Jio, while for Tata’s, which recently disclosed its plan to shrink core businesses, the move is akin to hitting the ground running.
This is Airtel’s seventh acquisition in five years and gives access to 40 million subscribers and assets of Tata’s mobile service business, including the scarce spectrum.
Coming close on the heels of the Idea-Vodafone merger, the deal makes Airtel one of the strongest in terms of spectrum holding. Airtel gets access to Tata’s 178.5 MHz spectrum in the premium 850, 1800 and 2100 MHz bands, which could strengthen its 4G coverage. Besides, Airtel will have the right to use Tata’s existing fibre network of Tata.
The deal, however, excludes the Tata Group’s stake in telecom towers firm Viom Networks Ltd.
“We believe today’s agreement is the best and Airtel will take control of operations and a small portion of Tata Teleservices Ltd’s unpaid spectrum liabilities,” N Chandrasekaran, chairman, Tata Sons Ltd said in a statement.
Employees of Tata Teleservices will be split among the two businesses — consumer mobile and enterprise and fixed broadband line and will be moved following an assessment of manpower requirements.
“Finding the right home for our long-standing customers and our employees has been the priority for us. We have enhanced multiple options and are pleased to have this agreement with Bharti,” he added.
According to Sunil Bharti Mittal, chairman, Airtel, the company will absorb Tata’s operations in 19 circles across the country.
“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,” he added.
Meanwhile, Tata is also exploring combining its enterprise business with Tata Communications and retail fixed broadband line business with Tata Sky. It will retain its 32.8 per cent stake in Viom Networks valued at Rs 4,526.4 crore.