India's Tata Group to sell troubled telecom business to Bharti Airtel

India's Tata Group to sell troubled telecom business to Bharti Airtel

The transaction will be done on a "debt-free cash-free" basis, the companies said in their joint statement, although Bharti Airtel will take over a "small portion" of Tata's unpaid spectrum liabilities. The new entrant Reliance Jio has fast grown to 130 million customers since its launch previous year.

The transaction will also provide Bharti Airtel with an indefeasible right to use (IRU) part of the existing fibre network of Tata.

In further consolidation of the Indian telecom industry, Bharti Airtel on Thursday entered into an agreement to acquire the mobile operations of troubled Tata Teleservices on a no-debt, no-cash basis. "Tata Teleservices.is in a really bad shape".

Tata Communications Thursday said that it is holding "exploratory talks" to buy the enterprise business of Tata Teleservices and its listed entity Tata Teleservices (Maharashtra). "The acquisition of additional spectrum made an attractive business proposition", Bharti Airtel Chairman Sunil Bharti Mittal said.

India's telecoms market, with 1.2 billion mobile subscribers, is in the midst of a wave of consolidation as smaller debt-laden players seek exits after overspending in airwave auctions. Well, that was the first merger in Indian telecom sector, and now today, we are hearing about the second merger in the country, it's between Tata Teleservices and Bharti Airtel (often referred as Airtel).

Tata Teleservices will pay off their debt of nearly Rs 34,000 crore which they took from TTML and TTSL.

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Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, that will be value accretive for both the Groups, the statement said.

It was observed that the Boards of Tata Sons, TTSL, and TTML had also given their approval.

Its parent, salt-to-software conglomerate Tata Group, is also in the middle of a restructuring exercise to improve profitability and cut its complex structure under its new chairman N. Chandrasekaran. Tata will retain its stake in Viom and take care of associated liabilities - American Tower Company (ATC) owns 51 per cent stake in Viom while Tata Tele holds 33 per cent and Tata Sons 2 per cent.

A Bharti Airtel office building is pictured in Gurugram, previously known as Gurgaon, on the outskirts of New Delhi, India April 21, 2016.

In case of individual companies, it believes that Bharti Airtel, Vodafone-Idea Cellular and Reliance Jio could, combined, account for over 90 percent of industry's revenues.

Goldman Sachs (India) Securities Private Limited is financial adviser to Tata. Not only does Airtel get access to 40 million subscribers, it also gets access to valuable spectrum in 3G and 4G bands for practically zero cost.

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