Airtel to Acquire Tata’s Mobile Business for Free

tata-airtel-merger-dealTata on 12th October entered into a deal to merge consumer mobile businesses of Tata Teleservices and Tata Teleservices Maharashtra Limited with Bharti Airtel. The proposed merger will include the transfer of all the customers and assets of Tata Consumer Mobile Businesses (CMB) to Bharti Airtel. The transaction will be done on a “debt-free cash-free” basis, the companies said in their joint statement. It will give Bharti an additional 40 million subscribers. Tata Sons Ltd will sell its consumer mobile business to India’s largest telecom operator Bharti Airtel Ltd virtually for free, as part of the group chairman’s strategy to exit businesses which have been a prolonged drag and have little visibility of future profits. Airtel is acquiring the assets on a debt-free, cash-free basis, except for it assuming a fraction of the unpaid spectrum fees that the Tata group owes to the department of telecommunications (DoT), the companies said in a joint statement on Thursday. The telecom industry, particularly smaller operators such as Tata Teleservices Ltd, has been hobbled by a crippling price war after the entry of Reliance Jio Infocomm Ltd, backed by India’s richest man Mukesh Ambani.
Airtel will absorb Tata’s mobile phone operations across the country in 19 circles (17 under Tata Teleservices and two under TTML). These circles represent the bulk of India’s population and mobile customer base. Tata Teleservices had a subscriber base of 44 million and revenue market share (RMS) of 5% at the end of the June quarter, according to Goldman Sachs. With the merger, Airtel’s overall subscriber base is now expected to increase to as much as 351 million as against the combined Vodafone-Idea’s projected 391 million consumer base. Airtel’s RMS will also rise to more than 40% from 35.6% in September, a tad short of the combined 42% RMS of Vodafone-Idea. Tata’s average revenue per user stood at Rs159/month, lower than that of Airtel and Vodafone, but higher than Idea’s. The acquisition will also bolster Airtel’s position vis-a-vis Reliance Jio, as Airtel will get access to 178.5 megahertz (MHz) spectrum (of which 71.3MHz is liberalized or free to trade) in the 850MHz , 1,800MHz and 2,100MHz bands, and help it strengthen its 4G coverage. “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,” Sunil Bharti Mittal, chairman of Airtel, said in the statement.

Filed in: 2G Services, 4G Services, Airtel, DoT, Mobile Services, Mobile World, Stock Market, Subscriber Base, TATA Teleservices, Telecom News, Telecom Operators, World News Tags: , , ,

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