Bharti Airtel will acquire Tata Group's loss-making mobile telephony business, almost for free, boosting its spectrum holding and raising subscriber base while saving the Tatas from the prospect of having to shut down the struggling unit.
Airtel, for whom it will be the 7th acquisition in five years, will from November 1 take over 4 crore customers of Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharashtra Ltd (TTML) in 19 telecom circles or zones on "a debt-free cash-free basis", the two groups announced in separate but identical press statements.
TTSL and TTML employees in the 19 circles, managing the consumer mobile business, along with 178.5 MHz of spectrum across 800, 1800, 2100 Mhz (3G, 4G) bands would be transferred to Airtel.
While all of the Rs 31,000 crore debt will remain with the Tatas, Airtel will assume payment of close to 20 per cent of the Rs 9,000-10,000 crore deferred payments for the spectrum to the government. Tatas will pay the rest.
The telecom sector is in a consolidation mode since the September 2016 entry of India's richest man Mukesh Ambani's Reliance Jio, which has given incumbent operators a run for their money through free voice calling and cheap data offers.
Jio has gained 12.8 crore subscribers with in a year.
In February, Airtel absorbed Telenor's operations in seven circles -- Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam in a similar no cash deal.
Earlier this year, Vodafone India and Idea Cellular agreed to merge their operations to create the country's largest telecom operator worth of more than USD 23 billion (roughly Rs 1,51,153 crore) with 35 per cent market share.
With this deal, Airtel will have over 32 crore customers, way below 40 crore users with the merged Vodafone-Idea entity.
"Instead of closing down the consumer mobile business, which would have entailed a much higher cost and involved letting go of employees and vendors etc, we have chosen this route," Tata Group chief financial officer Saurabh Agrawal told
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