‘No cash, no debt’ deal gives Airtel access to spectrum, 40 million users
Mumbai, Oct 12:
Ending a 20-year-old saga of poor decisions and mounting losses, Tata Teleservices on Thursday said it will merge its consumer mobile businesses with Bharti Airtel in a cashless deal.
The deal consolidates Airtel’s standing as the country’s No. 1 operator in terms of revenue market share even if the Vodafone-Idea merger were to go through.
It also gives Airtel access to valuable spectrum to thwart the latest challenge in 4G services from Reliance Jio.
Under the deal, Airtel will get access to 178 MHz of additional spectrum and 40 million subscribers. Airtel is not paying anything to Tata Tele other than absorbing a substantial number of the 5,000 employees and paying part of the spectrum liability that the latter owes to the Department of Telecom.
Tata Tele will retain the entire debt on its books in addition to certain assets, including fixed line, broadband, enterprise operations and its stake in tower company Viom Networks.
“This is a significant development towards further consolidation in the Indian mobile industry…and further strengthen(S) our market position in several key circles. The acquisition of additional spectrum made an attractive business proposition,” Bharti Airtel Chairman Sunil Bharti Mittal said.
“It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies,” Mittal added. This is Airtel’s seventh acquisition in the past five years.
Analysts at Bank of America Merill Lynch said the deal was incrementally positive for Bharti. “We see the merger generating opex and capex synergies for Bharti, and fits in well with its strategy of acquiring spectrum from smaller players, as they have done in recent past in transactions with Telenor, Aircel, Qualcomm, Videocon and Augere wireless,” the analysts noted.