The Mumbai bench of the National Company Law Tribunal (NCLT) has cleared Bharti Airtel’s acquisition of Tata Teleservices’ consumer mobility business, a deal which will help the Sunil Mittal-owned telco close the market share gap with leader Vodafone Idea besides strengthening its 4G spectrum portfolio to take on Reliance Jio more effectively.
NCLT’s Mumbai bench “has sanctioned the scheme of arrangement amongst Tata Teleservices (Maharashtra) and Bharti Airtel and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013,” Tata Teleservices said in a regulatory filing on BSE Wednesday.
The scheme, it said, would “be given effect, subject to the fulfillment of certain conditions, including transferee company (read: Bharti Airtel) obtaining necessary approval of NCLT’s Delhi bench and the approval of the DoT”.
Bharti Airtel, which is India’s second largest telco with over 343 million users – didn’t respond to ET’s emailed queries.
Shares of Tata Teleservices (Maharashtra) – the listed unit of Tata Teleservices Ltd. (TTSL) – zoomed nearly 8% to close at Rs 4.14 on BSE, while Airtel shares closed nearly 2% higher at Rs 323.
The deal now needs approvals from NCLT-Delhi and, crucially, the Department of Telecommunications (DoT).
Under the terms of the deal, Airtel will take care of roughly Rs 1,500-2,000 crore of the Rs 10,000 crore spectrum auction-related payments that Tata Teleservices needs to make to the government over the next few years.
But the DoT wasn’t convinced and demanded further clarity. So, late October, Airtel and TTSL, in a letter to the DoT, said the Sunil Mittal-promoted company would take care of the payment, including towards licence fee, spectrum usage charge and one-time spectrum charge. But the Airtel payment would in effect be bankrolled by Tata Sons.
Back in October 2017, Tata Teleservices had inked a term sheet to transfer its consumer mobility business to Bharti Airtel. Under the transfer pact, Airtel will acquire Tata Teleservices’ wireless business – with around 20 million customers, majority of its employees and some 178.5 units of airwaves – across 19 circles on a cash-free, debt free basis. Nearly 40% of the Tata airwaves that Airtel will receive are 4G-LTE ready.
At present, Airtel’s overall spectrum holdings across the 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz bands are at 1,086 units, according to a Morgan Stanley note.
The Bharti Airtel-Tata Teleservices deal has already received statutory approvals from the Competition Commission of India (CCI) and Securities Exchange Board of India (Sebi).
Closure of the merger deal will also reportedly provide Bharti Airtel with an indefeasible right to use (IRU) – or the first right to use – for part of the existing fibre network of the Tatas.
Source: Economic Times