Tatas to sell consumer mobile business to Airtel for 'free'

Bharti Airtel will also have an indefeasible right to use for part of the existing fiber network of Tata

Bharti Airtel will also have an indefeasible right to use for part of the existing fiber network of Tata

The transaction will be done on a "debt-free cash-free" basis, the companies said in their joint statement, although Bharti Airtel will take over a "small portion" of Tata's unpaid spectrum liabilities.

The shakeout in mobile telecom continued as the Tata Group quit the highly-competitive sector after almost 15 years, merging its loss-making consumer mobile business, consisting of Tata Teleservices Ltd and Tata Teleservices Maharashtra Ltd, with Bharti Airtel.

"The acquisition of additional spectrum made an attractive business proposition".

Airtel would acquire Tata's 4 crore mobile customers, which will bolster former's subscriber base ahead of the Idea- Vodfone merger in 2018.

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. We have evaluated multiple options and are pleased to have this agreement with Bharti".

Tata is also in the initial stages of exploring a combination of its enterprise business with Tata Communications and its retail fixed line and broadband business with Tata Sky.

The $100 billion Tata Group has bid goodbye to telecom business after facing a number of hurdles on its growth path.

This step has been taken on a debt-free cash-free basis.

Only in March, the Tata group and Japan's NTT Docomo finally resolved a row over a foundering telecom venture.

A court case followed and in June 2016 an global arbitration court ordered Tata to pay $1.17 billion in damages.

The sources cited earlier said Airtel have also expressed their desire to combine forces in the enterprise segment. In some other group companies, such as Tata Power, selling off troubled assets has been identified as a way to pare back debt. The merge deal is a much better option for the Tata's than totally closing their business.

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. According to a CLSA report, the answer is yes.

Tata Group, which is known for doing business transparently, could not manage telecom regulatory policies of several decision makers in the recent governments. "You can now offer them TV, streaming videos, voice, wi-fi, gaming either through satellite or through broadband", explained a group official. This includes over 40 million customers who would add to Airtel's userbase. It already works with most leading telcos in the country, including Airtel, Aircel, MTS, Vodafone, Idea, Uninor and BSNL among others, besides Tata Teleservices.

Pressure has been mounting on telecom companies since Reliance Industries' telecom arm emerged on the scene in September a year ago. Reliance Jio does not have fixed line telephony and Mukesh Ambani believes in all-IP. Jio has gained 12.8 crore subscribers with in a year.

"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".

Nikkei staff writers Kiran Sharma and Yuji Kuronuma in New Delhi contributed to this article.

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