Tata Teleservices taking exit from telecom industry

Tata Teleservices, which as per the telecom regulatory authority of India (TRAI) has a 3.5% share of wireless customers with 42.09 million users as of July, has been making losses and currently has a debt of around Rs 30000 crore.

Tata has been facing immense pressure over the years to retain subscribers and invest in operations amid ever-increasing competition. This was heightened after the entry of Reliance Jio in September 2016. After the financial year ended March, Tata Teleservices reported a net loss of Rs. 4,617 crore.

So Tata Teleservices decided to shut down its telecom business.

This will be one of the first big Tata units to shut in the group’s 149-year-old history. Tata Teleservices established in 1996 with landline operations. It launched CDMA operations in 2002, then adopted GSM in 2008 and received Rs 14,000 crore of investment from NTT Docomo and which eventually decided to exit the joint venture in 2014.

And that’s where Bharti Airtel took an entry in this story.

Airtel to buy Tata Teleservices:

Bharti Airtel and Tata on Thursday announced that they have entered into an understanding. The Tata Group has agreed to sell its mobile business to Bharti Airtel for free.

Yes, you read that right Airtel is getting Tata Teleservices’ mobile network business on a “debt-free cash-free” basis. In simple words, Airtel getting Tata Teleservices mobile unit for nothing. Airtel taking a small portion of the unpaid spectrum liability of Tata’s towards DoT, which is to be paid on the deferred basis.

The deal will give a boost to Airtel’s subscriber base. It will get more than 40 million new users. It is already the biggest operator in the country though it will lose the position after Vodafone-Idea merger.

What’s next?

Tata’s wireless operations will continue as usual until the completion of the deal and Airtel is getting the right to use part of the existing fibre backbone network of Tata Teleservices. Besides, the Tatas will retain their stake in tower company Viom Networks, and will take care of the liabilities associated with it, the two companies said.