Mumbai: Bharti Airtel Ltd is acquiring the Tata conglomerate's consumer mobile business, the two companies said on Thursday, in a deal that gives India's top wireless player a major subscriber base boost for virtually free, while stemming the bleed for Tata from a loss making venture.
The merger will be executed on a debt-free cash-free basis, except for Bharti Airtel assuming a small portion of the unpaid spectrum liability of Tata's towards the department of telecom, which is to be paid on a deferred basis, according to the news release.
"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.
Although the two companies have entered into an understanding, the acquisition of the mobile businesses by Airtel is pending regulatory approvals.
The transaction will create substantial long-term value for shareholders given the significant synergies, he said.
Furthermore, this transaction also includes transfer of all the assets of Tata CMB to Airtel which would enable the latter to strengthen its footprint in the 850, 1800 and 2100 MHz bands.
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Commenting on this merger, N Chandrasekaran, Chairman of Tata Sons, said, "We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders".
"The acquisition of additional spectrum made an attractive business proposition".
The merger will also provide Bharti Airtel the right to use Tata's existing fiber network.
Tata is also in initial stages of exploring combination of its enterprise business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky.
Bharti Airtel will absorb the operations of TTSL and TTML across the country in 19 telecom service areas, it added. Ltd acted as financial advisor to Tata.
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