The companies said the deal is on a no-debt, no-cash basis, implying Airtel is not taking over any of the about Rs 40,000 crore debt with Tata Teleservices and is neither paying any cash. Reliance Jio was able to grow its subscriber count to 128 million in just a year.
The $100 billion Tata Group has bid goodbye to telecom business after facing a number of hurdles on its growth path.
Tata Group, which is known for doing business transparently, could not manage telecom regulatory policies of several decision makers in the recent governments.
Tata Teleservices will merge its consumer mobile businesses with Bharti Airtel Ltd, the companies said in a statement.
Bharti Airtel will acquire Tata Group's loss-making mobile telephony business, nearly 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.
PNP, NBI welcome PDEA lead in drug war
The memorandum was addressed to the PNP, National Bureau of Investigation, Armed Forces of the Philippines and other government agencies involved in the war on drugs.
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. The merger will be debt-free and cash-free, which implies that Airtel won't be adding any significant liabilities in the deal.
Tata Teleservices will pay off their debt of nearly Rs 34,000 crore which they took from TTML and TTSL. Tata will also retain its stake in Viom and will take care of the liabilities associated with it.
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. TTSL and TTML's operations, across the nineteen circles (17 under TTSL and 2 under TTML) it is present in, will be absorbed by Airtel. "It's also a big positive for Airtel as they will have to pay less for the spectrum they are gaining", said Sanjiv Bhasin, an executive vice president at financial services firm IIFL.
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.
The proposed merger will include transfer of all the customers and assets of Tata CMB to Bharti Airtel, further augmenting Bharti Airtel's overall customer base and network.
Tata is also in the initial stages of exploring a combination of its enterprise business with Tata Communications Ltd and its retail fixed-line and broadband business with satellite TV arm Tata Sky, according to the statement. The team of Bharti Airtel is said to be discussing the deal internally and might announce it officially later today or tomorrow.