Thursday, 19 October 2017

Bharti buys Tata's mobile operations

By Mary Lennighan, Total Telecom
Thursday 12 October 17

Indian mobile heavyweight to subsume Tata's customers, spectrum across 19 circles; Tata considering merging enterprise and fixed ops with other group businesses

Bharti Airtel on Thursday announced that it will acquire Tata Group's consumer mobile businesses for an undisclosed sum, bringing to an end years of speculation over the future of the operations. Under the terms of the deal, Tata Teleservices and Tata Teleservices Maharashtra will be subsumed by Bharti Airtel on a cash-free and debt-free basis, with the exception that Bharti will assume a small portion of Tata's unpaid spectrum liabilities with the Department of Telecommunications (DoT)…

Bharti Airtel on Thursday announced that it will acquire Tata Group's consumer mobile businesses for an undisclosed sum, bringing to an end years of speculation over the future of the operations.

Under the terms of the deal, Tata Teleservices and Tata Teleservices Maharashtra will be subsumed by Bharti Airtel on a cash-free and debt-free basis, with the exception that Bharti will assume a small portion of Tata's unpaid spectrum liabilities with the Department of Telecommunications (DoT), India's largest mobile operator announced.

The deal, which is subject to regulatory approvals, will see Bharti take over Tata's customer base across 19 telecoms circles: Tata Teleservices operates in 17 circles and Tata Teleservices Maharashtra in two.

Tata has been haemorrhaging customers in recent months, but as of mid-2017 had a mobile subscriber base of 43.7 million, giving it a 3.68% share of the market, according to Telecom Regulatory Authority of India (TRAI) figures. At the time of writing the TRAI was blocking access to more recent figures. At the same date Bharti Airtel had 280.65 million customers and a 23.65% market share.

In addition to boosting its customer base, and perhaps more importantly, Bharti will also gain valuable spectrum holdings through the Tata deal.

Bharti said tit will gain 178.5 MHz of spectrum, of which 71.3 MHz is liberalised, across the 850 MHz, 1800 MHz, and 2.1 GHz bands.

"The acquisition of additional spectrum made an attractive business proposition," said Sunil Bharti Mittal, chairman of Bharti Airtel, in a stock exchange announcement.

"It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders, given the significant synergies," he said.

The announcement was unclear on the future for Tata's employees.

Earlier this week Indian press reports claimed that the telco would lay off the majority of its 5,000-plus workforce.

Thursday's announcement stated that Tata will split its workforce along business lines – that is, separating its mobile staff from enterprise, fixed-line and broadband – and would move staff accordingly, following "an optimal manpower planning."

The telcos also said that Tata is in the initial stages of exploring the possibility of combining its enterprise business with Tata Communications and its retail fixed-line and broadband operations with Tata Sky.

"Any such transaction will be subject to respective boards and other requisite approvals," they said.

The firms added that Tata will keep its stake in towers company Viom and will take care of the liabilities associated with it.

The telcos did not say when they expect the merger to close, but given that it will have to go through the Indian regulatory approvals process, it is unlikely to be in the immediate future.

A fortnight ago rival operators Reliance Communications and Aircel called time on their own merger plans as a result of "inordinate delays" in securing the necessary regulatory approvals.

Adding Tata's customers to its portfolio will not be enough for Bharti to retain its position as India's market leader though, given rival Vodafone's plan to merge with Idea Cellular.

Together Bharti and Tata serve 27.33% of India's mobile users, a figure that rises to 31.32% when Telenor India's customers are included; Bharti agreed to merge with Telenor's local operations in February and the deal is due to close early next year. Presuming the Vodafone/Idea tie-up closes as planned, that merged entity will lead the pack with a market share of 34.4%, based on end-June figures.

 

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