Just as Tata Group was planning to shut down its telecom arm, it has come as a huge relief for the Group as India’s largest telecom operator Bharti Airtel has agreed to acquire the mobile business of Tata Teleservices. The news also comes as a huge relief for the 5000 plus employees of Tata Tele, who were staring at a dark future just a few days ago. The deal yet again strengthens the notion that the telecom sector has entered the consolidation phase, after a period of intense competition that saw the birth of various new companies. In the consolidation phase, only the biggest telecom companies would be able to survive in the market. Smaller and loss-making companies such as Tata Teleservices would be acquired by bigger players in the telecom market.
Bharti Airtel also stands to gain from the acquisition of Tata Tele, as it will get an instant boost in the size of its customer base. The merger will be debt-free and cash-free, which implies that Airtel won’t be adding any significant liabilities in the deal. Airtel will only be sharing the burden of a small part of the unpaid spectrum liability. Airtel will acquire Tata’s telecom rights in 19 circles across the country. All the assets and customers of Tata Tele will be transferred to Airtel after the deal. Overall, Airtel will add more than 4 crore customers, which will give a significant boost to its revenues.