Rumours have been swirling for a few days and it would appear there is some substance; Bharti Airtel will absorb Tata Group’s struggling mobile business.
The acquisition is still subject to regulatory approval, however it would transfer all customers and assets of Tata Consumer Mobile businesses to Bharti Airtel. It wouldn’t necessarily be considered one of the major players in the Indian space, but Bharti will still bolster its ranks by an additional 40 million customers. Not a bad bit of business considering all past liabilities and dues to be settled by Tata.
“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 Sunil Bharti Mittal, Chairman of Bharti Airtel.
“The acquisition of additional spectrum made an attractive business proposition. It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies.”
The merger would include assets in the 1800, 2100 & 850 MHz bands, as well as the right to use Tata’s existing fibre infrastructure. This is where Bharti will have to fork out a bit more cash however, as it would undertake a small portion of the unpaid spectrum liability.
It’s a rumour which has been around for a while, as Tata never really got going in the Indian mobile space. Aside from being a side-player in the prolonged battle between Jio and Bharti, it has also been battling minority shareholder NTT Docomo in a $1.2 billion dispute. This was an argument which was settled a few months back, but it would appear Tata just wants clear of the raging consumer mobile war. Might not be a bad move considering how slim the profit margins are looking.
While consolidation will certainly help Bharti fight back against Jio, you have to wonder whether the consumer is going to get the sharp end of the stick. Tata is just the latest brand to disappear, with Telenor exiting in February and Vodafone merging with Idea; you have to start wondering whether there are going to be enough providers around to offer variety in the second most populated country in the world.