The boards of Bharti Airtel, Tata Teleservices (TTSL) and its listed Tata Teleservices (Maharashtra) (TTML) unit separately cleared the terms for the merger of Tata Group companies’ consumer mobility business with the nation’s top telecom operator. The cash-free merger involves a mix of share swap and debt.
In a regulatory filing on Wednesday, Bharti Airtel said TTSL would demerge its consumer wireless business, which would then be combined with Airtel’s operations. In the Rajasthan circle, though, the demerged business would become part of Airtel unit Bharti Hexacom.
Shareholders of TTSL will get 500 unlisted redeemable preference shares of Airtel at a face value of Rs 100 each in proportion to the stake they hold in the Tata Group firm. Holders of compulsory convertible shares and optionally convertible preference shares in TTSL will get 10 listed redeemable preference shares at a face value of Rs 100 apiece for each share they hold.
According to a second scheme of arrangement mentioned in the filing, the shareholders of listed TTML will get one Airtel share with a face value of Rs 5 each for every 2014 equity share they hold in the Tata firm. Holders of redeemable preference shares of TTML will get 10 similar unlisted redeemable securities in Airtel.
“The shareholding pattern of Bharti Airtel shall change to the extent of issuance of equity shares and (redeemable preference shares) to the shareholders of the transferor company (TTML),” Airtel said.
On Wednesday, Bharti Airtel closed 1.5% lower at Rs 528.60 on the Bombay Stock Exchange, while TTML closed 1.6% down at Rs 7.
In October, Bharti Airtel said it would buy Tata Tele’s consumer mobile business on a cash-free, debt-free basis, which would help it add revenue and subscriber market share and give access to 4G airwaves in the 850 Mhz band, thus making it more competitive against moneyed rival Reliance Jio and a combined Vodafone-Idea Cellular.
The merger proposal has so far received the approval of the Competition Commission of India, but clearances from the Securities and Exchange Board of India, stock exchanges, National Company Law Tribunal and the telecom department are yet to come.
The Airtel filing put the 2016-17 turnover of TTSL at Rs 7,366 crore and that of TTML at Rs 1,574 crore. Airtel’s turnover was Rs 62,276 crore.
According to the filing, the deal would strengthen Airtel’s customer base and revenue, thus improving its competitiveness and generating.
Source: Economic Times