Bharti Airtel to merge with Tata telecom business


Tata Sons Chairman N Chandrasekaran had recently conceded that the groups mobile business Tata Teleservices is in a "really bad shape" and that a "tough call" will have to be taken on the business in this financial year. Idea has 191 million users as of August.

"We have evaluated multiple options and are pleased to have this agreement with Bharti", he added.

Besides Tata Tele, the Tata's also have other business entities in the media and communication space - its enterprise business, Tata Communications and Tata Sky.

The Tata Groups' loss making telecom business, Tata Teleservices, finally found a graceful way to depart from the telecom business as the company is being acquired by Bharti Airtel - India's largest telecom firm.

Agrawal, who in July joined Tatas from Aditya Birla Group, said closing down the business would have been against the ethos of Tata Group and would have rendered employees jobless.

"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. It will also enable Airtel to bolster its strong spectrum foot-print with the addition of 178.5 MHz spectrum, according to a company statement. 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. For them it was a choice between whether you shut it down completely or merge with a player.

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What are the advantages that Bharti Airtel and Tata Teleservices will see post-merger?

Pressure has been mounting on telecom companies since Reliance Industries' telecom arm emerged on the scene in September a year ago. This will surely come in handy for posing formidable challenge to Mukesh ambani owned Reliance Jio.

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 United States dollars 23 billion (roughly Rs 1,51,153 crore) with 35 per cent market share. On Tuesday, Bharti Airtel revealed 4G phones, in association with Karbonn Mobiles, for the effective price of 1,399 rupees. Jio has gained 12.8 crore subscribers with in a year.

The 19 circles coming to Bharti "represent bulk of India's population and customer base", it said.

"As a result, industry-wide mobile blended average revenue per user is likely to fall to around 150 rupees ($2.2) by March 2018, down 5% from March 2017", Fitch said in a note.

If this acquisition deal does go through, it will mark yet another consolidation in India's beleaguered telecom sector.