The Department of Telecommunications (DoT) has approved the merger of Tata Teleservices’ consumer mobility business with Bharti Airtel, paving the way for the closure of the sector’s last major M&A deal more than two years after it was announced.
The DoT “has conveyed approval of the Competent Authority in DoT for taking on record demerger of Consumer Mobile Business Undertaking of the Company into Bharti Airtel Limited (“BAL”) in terms of the Composite Scheme of Arrangement between the Company and BAL which was approved by the respective Shareholders and Creditors and by …National Company Law Tribunal benches at Delhi and Mumbai vide their orders dated January 30, 2019 and December 4, 2018 respectively,” said Tata Teleservices in a regulatory filing on Thursday.
The DoT’s nod came in after the Supreme Court (SC) refused to grant stay to an interim order of Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which had directed the government to clear the deal.
The DoT had moved SC against the TDSAT which stayed the government’s demand for about Rs 8,000 crore in bank guarantees for one-time spectrum charges (OTSC), and asked the government to take the merger on record. After the TDSAT order, Airtel and the Tatas had gone ahead and merged the operations, and filed in the Registrar of Companies, which took the deal on record.
The DoT then moved the SC, challenging the appellate’s order. The apex court, however, refused to put a hold on the merger and directed the government to give its nod to the alliance.
“The DoT approval is without prejudice to the rights and contentions of the DoT till the Telecom Petition No. 22 of 2019 filed by BAL which is pending before Hon’ble TDSAT (and appeal, if any, against the Judgement(s) of the Hon’ble TDSAT) is disposed of,” said the regulatory statement on Thursday.
The closure of the deal will help Airtel absorb Tata Group-owned telco’s consumer mobile operations in 19 circles — 17 under Tata Teleservices and two under the listed Tata Teleservices (Maharashtra) Ltd.
The “cash free debt free deal” gets Airtel an additional 178.5 MHz of spectrum in three bands that are widely used for 4G and help it to keep pace with Reliance Jio Infocomm.
The deal has helped Tata Group to rid itself of the loss-making mobility business, which has been a drag on its finances.
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. Sistema Shyam Teleservices merged into Reliance Communications, which, together with Aircel, has gone bankrupt and filed for insolvency.
Even bigger operators like Vodafone India and Idea Cellular were forced to merge operations to stay alive in the market.
Source: Economic Times