Tata’s new boss N Chandrasekaran has found a solution for his loss-making and highly leveraged telecom business, four months after initiating talks with his counterpart at Bharti Enterprises, Sunil Mittal. Tata Teleservices is selling its wireless mobile business to Bharti Airtel, said multiple sources aware.
The business along with its around 40 million customers will be transferred on a cash free, debt-free basis for some consideration.
Bharti will take on part of Tata’s Rs 100 billion spectrum liability as well. Tata Tele has 180 MHz of spectrum across 800,1800, 2100 Mhz (3G, 4G) bands in 19 circles. Bharti will also be signing an indefeasible Rights of Use (IRU) agreement with Tata Teleservices for access to its fibre optic backbone.
The Bharti board is meeting to discuss and accept the proposal. An announcement is due later this evening. Spokesperson of Tata and Bharti were not immediately available for comments.
Group watchers on both sides believe this could possibly be the beginning of a much larger strategic alliance and consolidation between both sides involving telecom, overseas cable and enterprise services, and direct-to-home TV businesses.
The acquisition will enable Bharti Airtel, the bigger partner in the alliance, to close the gap between Idea-Vodafone both in terms of numbers of subscribers as well as revenue market share. Airtel has nearly 280 million mobile phone users in India. Airtel will also get access to a ready network including 4G bandwidth in the much-sought-after 800 MHz band along with the fibre backbone.
