India’s largest mobile service provider Bharti Airtel is all set to acquire Tata Teleservices’ losing making mobile business. Although the acquisition will be done on a debt-free cash-free basis, but this still marks one of the biggest deals in Indian telecom history and also Tata’s unceremonious exit from mobile business.
The news of acquisition comes amid media reports that Tata Group is mulling to shut down Tata Teleservices, which would have left its more than 5,000 employees unemployed. However, reports of Tata’s trying to sell their mobile business to other competitors including Bharti Airtel were also doing rounds, but these reports didn’t receive much media attention.
Meanwhile, Sources claim that Tata – Airtel talks had earlier hit a roadblock, but talks got reviewed reportedly due to efforts by Tata Group’s CEO N Chandrasekaran. Since becoming the CEO, Chandrasekaran has been pressure to trim Tata Group’s rising debt, which has expectedly propelled him to sell group’s many loss making ventures.
What would Airtel achieve with this acquisition?
Airtel would acquire Tata’s 4 crore mobile customers, which will bolster former’s subscriber base ahead of the Idea- Vodfone merger in 2018. But the biggest benefit that Airtel would derive is access to Tata’s 178.5 MHz spectrum bands spread across 19 circles. This will surely come in handy for posing formidable challenge to Mukesh ambani owned Reliance Jio.
However, Bharti Airtel will have to partly bear Tata’s Rs 10,000 crore spectrum liability, which the latter owes to Department of Telecommunication.
Both Tata and Bharti have so far refused to comment on acquisition report.
If this acquisition deal does go through, it will mark yet another consolidation in India’s beleaguered telecom sector. The sector has been in stress ever since Reliance Jio made a grand entry earlier this year with free voice calls and cheap data plans.