Latest developments in the Indian telecom sector indicate Tata Teleservices may get into a strategic partnership with Reliance Jio. Finding a strategic partner for the loss-making Tata Teleservices is proving difficult, as Bharti Airtel reported to have dropped discussions on the matter. Thus, the possibility of a mega alliance between the Bharti Airtel and the Tata group’s telecom, overseas cable and DTH TV businesses seems to have gone into the freezer. This was confirmed by a number of people in various responsible positions in the Indian telecom industry.
Although it is yet not clear whether Bharti group officially turned down a formal proposal. But it is certain, the red signal to the discussion on alliance proposal came from the top-most leadership of Bharti Airtel. The possibility of the acquisition gathered momentum right after N Chandrashekharan assumed responsibilities as the chairman of the Tata Sons. However, the deal fell through mostly because of the Bharti group focusing elsewhere than the enterprise and DTH businesses, which the Tata group considers lucrative.
In this circumstance, the Tata group is fast running out of suitable options to click a strategic alliance for its debt-ridden teleservices arm. According to industry veterans, under the light of current development, Reliance Jio Infocomm seems to be the best option for the former to get into a strategic partnership with. However, for the Mukesh Ambani-headed Reliance Jio, the deal may not be attractive enough to go all the way either. Thus, the Tata group still seems to be in a difficult position to get out of the telecom business, which it is trying earnestly for quite some time. The factor that seems to stand in the way of a complete buyout is the liability in form of $4.5-billion debt that Tata Tele owes.
According to market insiders, with the options thinning out, Tata Teleservices now needs to offer a really lucrative offer to Reliance Jio, in order to close the deal successfully. With a huge user base of 125 million, Reliance Jio may not deny a strategic partnership if the Tata Teleservices shares its spectrum bandwidth and subscribers with the former. One may recall in this context, the Tata group even held discussions with Vodafone and Singtel earlier, but that too ended in a failure.