Tata Telecommunications has given its business to Bharti Airtel for free. This is the second deal for Bharti Airtel after Telenor ASA handed over its India mobile business to Telecom major Bharti Airtel.
As per lower estimates, Tata Teleservices is a $1 billion business. However, it has been transferred to Airtel for free. Telenor’s annualised business, however, stood at $606 million in the June Quarter.
However, Tata Tele and Telenor’s deal were quite different in terms of its constituents. Telenor’s deal envisaged operational contracts such as tower leases and employees, outstanding spectrum payments, etc. Nonetheless, the Tata-Airtel deal seems to be missing the link as it does not comprise of operational contracts and employees. Even outstanding spectrum payments are not being taken in entirety but only a fraction.
Airtel stands apart in the crowd as it happens to be the only buyer on the block, with Vodafone India Ltd and Idea Cellular Ltd already busy with their own share of mergers. Non-profitable business like TataTele could have been shut down but it included far higher costs. Hence, the parent company Tata decided to hand it over it Bharti who could infuse some life into the sick company.
Had Tata decided to shut down the business, an extra amount of Rs 8000 crore would have been used. This deal looks a win-win for both the business as it will give an edge to Bharti against its rival businesses. Also, it has made Tata’s aim of flushing out loss-making departments.
