Tata Teleservices (TTSL) and its unit on Monday completed the merger of their consumer business with that of Bharti Airtel and unit Bharti Hexacom, nearly two years after the announcement, transferring their assets, spectrum and some related debt to the Sunil Mittal-promoted carrier and concluding what was the last big-ticket M&A in the stressed sector.
“Following the Hon’ble TDSAT’s order directing the DoT (Department of Telecommunications) to take the merger on record and approval of the schemes of arrangement by Hon’ble NCLT, Delhi and Hon’ble NCLT, Mumbai, we are pleased to announce that the schemes of arrangement have become effective today July 1, 2019,” the two sides said in a joint statement Monday.
“Consequently, all customers, assets, spectrum and agreed liabilities of the Consumer Mobile Businesses of TTSL and TTML (Tata Teleservices Maharashtra Ltd.) now stand merged with Airtel,” they added.
In a separate notice to the stock exchanges Monday, TTML – the listed unit of TTSL – said that its shareholders will get one equity share of Airtel in exchange for 2,014 of the Tata Group company’s shares on the record date of July 12.
Also, investors holding fully paid-up, redeemable preference shares of TTML will get 10 paid-up redeemable, non-participating, non-cumulative preference shares of face value Rs 100 of Airtel, “in proportion to their holding” on the record date, the company added.
The merger, through which Airtel gets coveted 4G spectrum to take on Reliance Jio, and allows the Tata Group to shed its loss-making wireless telephony business which was a drag on group financials for several years, was first announced in October 2017. TTSL and TTML now will only operate landline services which does not need airwaves, people familiar with the matter said.
The completion of the deal comes about two months after the telecom tribunal in May allowed them to ‘operationalise the spectrum and undertake other consequential activities’, after partially staying DoT’s demand for about Rs 8,300 crore in bank guarantees in one-time spectrum charges (OTSC). The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) asked DoT to take on record the merger, but asked Airtel to submit half of the Rs 1,287.97 crore demand raised by the government as OTSC for Chennai circle licence extension, which the operator paid up last month.
But, the DoT is still to formally clear the deal with sources saying the government is considering challenging the TDSAT order in the Supreme Court.
But as things stand, Airtel has begun using TTSL’s airwaves from July 1. It though has got less than half of the airwaves and only a fraction of the carrier’s customer base, compared with what was announced back in 2017.
The Sunil Mittal-led telco will now get an additional 71.25 Mhz of liberalised spectrum in three 4G bands—1800 MHz, 2100 MHz and 850 MHz— from TTSL as opposed to 178.5 MHz which the carrier had two years ago. Airwaves in these bands are widely used for 4G, an area where Airtel is expanding fast to keep pace with Jio.
Company insiders said the companies have surrendered to the government 107.25 Mhz of non-auctioned airwaves, of which 66 Mhz was in the 1800 Mhz band and 40 Mhz in the 800 Mhz band. TTSL was expected to keep some part of the spectrum for enterprise services, but has decided against it.
