The merger will be carried out on a debt-free, cash-free basis. The next largest telco in the country is Vodafone at a distant 208 million.
In August, Tata Steel formed a joint venture with Germany's ThyssenKrupp to manage operations in Europe, after a round of sell-offs of steel plants in the United Kingdom and in continental Europe. The consolidation in the sector is being seen as an outcome of the competitive tariff being offered by newcomer Reliance Jio, which has managed 128 million subscribers in just one year.
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.
Its parent, salt-to-software conglomerate Tata Group, is also in the middle of a restructuring exercise to improve profitability and cut its complex structure under its new chairman N. Chandrasekaran.
Airtel will not take any debt with Tata Teleservices and neither will it pay any cash for the same. The remaining Rs 8,500 crore would be paid by the Tatas to the Department of Telecom, sources said. He further said that on completion, the proposed acquisition will undergo seamless integration; both on the customer as well as the network side, and further strengthen our market position in several key circles.
As a part of this transaction, Airtel will take over Tata's operations in 19 circles across the country, two of which are under TTML and the rest are under TTSL. Finding the right home for our longstanding customers and our employees has been the priority for us. "We have evaluated multiple options and are pleased to have this agreement with Bharti", said N Chandrasekaran, Chairman, Tata Sons.
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. Merging with Tata Tele, Airtel will have more than 320 million customers. Additional spectrum in 1800, 2100, and 850 MHz bands will be added to Airtel's pool and further help the operator strengthen its 4G network.
Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, noted Bharti Airtel in the news release.
The employees of Tata will be demerged on the lines of the two businesses i.e. CMB and EFL (Enterprise and Fixed Line and Broadband), and post an optimal manpower planning will be moved to Airtel.