An appellate tribunal has stayed the telecom department’s demand for dues of over Rs 9,000 crore from Bharti AirtelNSE 1.85 % as a precondition for approving its acquisition of Tata Teleservices’ consumer mobility division, and directed that the deal be cleared, paving the way for the closure of the sector’s last major M&A pact 18 months after it was announced.
“…we direct the concerned authorities of the Union of India to take the merger of the two companies and the license on record…,” the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruled in an interim order on Thursday.
In its order, the TDSAT stayed the government’s demand for about Rs 8,000 crore in bank guarantees for one-time spectrum charges (OTSC), saying that similar demands have been stayed in other cases by courts, including the Bombay High Court.
The TDSAT also stayed a demand for bank guarantees worth Rs 1,287.97 crore that the Department of Telecom (DoT) had raised towards pending OTSC dues related to the merger of the erstwhile Chennai circle with Tamil Nadu in 2007, but with a rider.
Order to Help Closure of Deal
“This demand which appears as part of condition … which requires its immediate payment before approval, shall remain stayed until further orders, provided the petitioner furnishes with the registry of this tribunal bank guarantees for 50% of the said demand within four weeks,” the TDSAT said in its order.
The telecom department is expected to appeal against the order, said a person familiar with the matter.
The case had then gone up to the Supreme Court, which had ruled in favour of the Gurgaon-based telco.
Thursday’s TDSAT verdict will pave the way for the closure of the deal that will help Airtel, India’s second-largest telco, absorb Tata Group-owned telco’s consumer mobile operations in 19 circles — 17 under Tata TeleservicesNSE 6.90 % and two under the listed Tata Teleservices (Maharashtra) Ltd.
Airtel will get an additional 178.5 MHz of spectrum in three bands that are widely used for 4G, an area in which the Sunil Mittal-led company is expanding to keep pace with Reliance Jio Infocomm.
Airtel will add about 17 million of Tata Tele’s mobile subscribers to its over 340 million users, adding to its subscriber and revenue market shares.
The Bharti Airtel-Tata Teleservices pact was the last of the major M&A deals stitched up amid immense financial pressure on then existing telcos due to the brutal price war unleashed since the entry of Jio in September 2016.
Smaller operators such as Telenor India and Tata Teleservices exited — both bought by Airtel.
Bharti Airtel had last month moved the TDSAT against DoT’s demands, which were part of a conditional nod to the merger announced in September 2017.
Specifically, on the OTSC demand for the merger of Chennai and TN circles, Airtel lawyers termed the quantification “baseless in absence of availability of any market-driven price of the spectrum for the erstwhile Chennai LSA (Licensed Service Area)”.
