Published On: Thu, Oct 12th, 2017
Business | By IANS

Bharti Airtel acquires Tatas’ telecom business on debt and cash-free terms

New Delhi: Bharti Airtel and Tata on Thursday announced that they have entered into an understanding to merge Consumer Mobile Businesses (CMB) of Tata Teleservices Limited (TTSL) and Tata Teleservices Maharashtra Limited (TTML) into Bharti Airtel.

Bharti Airtel will absorb Consumer Mobile Businesses (CMB) of TTSL and TTML across the country

The acquisition is subject to requisite regulatory approvals, the statement said without revealing the acquisition amount.

The merger is being done on a debt-free cash-free basis, except for Bharti Airtel assuming a small portion of the unpaid spectrum liability of Tata’s towards DoT, which is to be paid on deferred basis, the joint-statement added.

As part of the agreement, Bharti Airtel will absorb Consumer Mobile Businesses (CMB) of TTSL and TTML across the country in 19 circles (17 under TTSL and two under TTML).

“This is a significant development towards further consolidation in the Indian mobile industry and reinforces our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust technology and solid spectrum portfolio,” said Bharti Airtel Chairman Sunil Bharti Mittal.

“On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side, and further strengthen our market position in several key circles. The customers of Tata will be able to enjoy India’s widest and fastest voice & data network, and bouquet of Airtel’s best-in-class products and services,” he said.

“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,” Mittal added.

The Bharti Board, which met on Thursday afternoon, has approved this transaction. The Boards of Tata Sons, TTSL and TTML, too, have given their approval.

According to earlier reports, TTSL has seen its net worth fall by over Rs 11,600 crore in FY17, and losses increase from Rs 2,409 crore to Rs 4,617 crore year-on-year. Revenues, meanwhile were down 10 per cent to under Rs 10,000 crore.

According to sources, Tata Sons is saddled with over Rs.66,500 Crore of debt and liabilities as a result of Tata Teleservices merger with Bharti.

Industry sources said out of this merger deal, Bharti Airtel got over 40 million customers with high churn rate and over 5,000 employees.

Sources said TTSL owes the Department of Telecommunications (DoT) over Rs.10,140 crore of deferred spectrum payments and also has regulatory contingent liabilities to an estimated tune of around Rs 10,900 crore.

“It has bank guarantees of Rs 3,700 crore submitted with DoT. It is beset with a liability of Rs 7,200 Crore which is to be paid to NTT Docomo as arbitration award for the latter’s 21.6 per cent stake in Tata Teleservices. NTT Docomo had exercised option on its stake owing to the non-compliance with agreed operational and financial milestones,” sources said.

However, N Chandrasekaran, Chairman, Tata Sons said it was a most optimal solution.

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