Indian’s largest telecom operator Bharti Airtel Ltd, is acquiring the Tata conglomerate’s consumer mobile business, Tata Teleservices virtually free of charge in an agreement that gives India’s top wireless player a major subscriber base boost, while stemming the bleed for Tata from a money-losing venture.
About the Agreement
Bharti Airtel and Tata have entered into an agreement to mingle with consumer mobile business (CMB) of Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharashtra Ltd (TTML). The union is done on a debt-free of cash basis, except for Airtel assuming a small portion of the unpaid spectrum liability of Tata’s towards DoT, which is to be paid on a deferred basis.
Bharti Airtel will absorb CMB of TTSL and TTML across the country in 19 articles (17 under TTSL and TTML under). The Bharati board has approved this transaction. The Boards of Tata Sons, TTSL, and TTML, too, have given their approval. With the deal, Bharti Airtel will get over 40 million customers with high churn rate and over 5,000 employees.
Benefit of the union
The merger allows the group to shed a loss-making business which Chandrasekaran said was “close to impossible for us to recover”. Moreover, Mukesh Ambani’s Reliance Jio Ltd. Has disturbed Indis’s telecom industry by proffering free services and economic plans. The country’s present operator has been gaining share at the expense of smaller rivals like Tata Teleservices Ltd. And Tata Teleservices (Maharashtra) Ltd.
The Deal will make Bharti Airtel unquestionably the strongest in terms of spectrum holding, said Kunal Bajaj (telecom expert and consultant). with Vodafone and Idea coming together, their spectrum holding to balloon and become quite substantial, especially in the 1,800 MW band, he said.
It is a good deal for Bharti as well as they are getting 40 million consumers, a significant amount of spectrum which will help them in future to strengthen their 4G network and to compete effectively against Reliance Jio, he said.
The employees of Tata Teleservices will be split among two business that is consumer mobile, and enterprise and fixed broadband line business line business with Tata Sky. It will retain its 32.8% stake in Viom Networks valued at ₹ 4,526.4 core and take care of associated liabilities.
Reason behind this union
Tata Teleservices has been a money-losing business for the Tata group – they din not use business insurance miami. According to the report, TTSL has been seen its net worth fall by over ₹ 11,600 crores in FY17, and losses increase from ₹ 2,409 crores to ₹ 4,617 crores year-on-year.
The chairman of Tata N Chandrasekaran Teleservices was in a really bad shape on the bad shape on the back of huge debt and monthly cash losses. The deal was vital as the salt-to-software conglomerate is in the middle of a restructuring exercise to improve gain and cut its complex structure after Chandrasekaran took over the chairmanship.