Tata Communications in talks to buy Tata Teleservices' enterprise business

Bharti Airtel, Tata to merge consumer mobile businesses

The new entrant Reliance Jio has fast grown to 130 million customers since its launch a year ago.

Tata Tele will add 40 million users to Bharti Airtel's network, keeping the Sunil Mittal-company firmly in the race to protect its market leader status, even as its next biggest rivals Vodafone India and Idea Cellular threaten to topple it from the top spot by merging their businesses.

Tata Group has made a decision to sell its troubled consumer telecom businesses to India's largest mobile services provider Bharti Airtel for an undisclosed sum, making it the latest casualty of the fierce competition in the country's telecommunications space.

The news of acquisition comes amid media reports that Tata Group is mulling to shut down Tata Teleservices, which would have left its more than 5,000 employees unemployed.

Tata Teleservices will merge with Bharti Airtel as the Tata group firm looks to tide over its financial woes by exiting the mobile telephony business. The spectrum costs are estimated around Rs 10,000 crore from which Bharti Airtel will be paying around Rs 1500 crore and Rs 8,500 crore will be paid by the Tata's to the Telecom Department.

Tata Teleservices, the mobile business, was weighed down by huge debt, spectrum liability and monthly cash losses. According the the agreement, Airtel will not take any of the about Rs 40,000 crore debt with Tata Teleservices and neither pay any cash. As part of the merger, Airtel will absorb Tata's consumer mobile business operations across the country in nineteen circles (17 under TTSL and 2 under TTML).

The statement also said Tata is 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. "NTT Docomo had exercised option on its stake owing to the non-compliance with agreed operational and financial milestones", sources said.

Tata Sons Chairman N Chandrasekaran said the agreement is the "best and most optimal solution" for the Tata Group and its stakeholders.

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.

Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, noted Bharti Airtel in the news release. Although, experts also point out it may be a tough task to retain all the customers as they tend to drop out of a network as ownership or brand changes. Both these telecom operators announced their merger back in March this year, and after the transaction is complete, this merger will create the single largest telecom operator in India.

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