Tata Teleservices to Pay $900 million as Compensation to ATC After Terminating Tenancies

After deciding to sell its mobility business to Bharti Airtel, Tata Teleservices pre-maturely packed up 30,000-odd tenancies for which it will likely pay around $900 million to American Tower Corporation (ATC) as compensation. This step is supposed to make the way clear for the acquisition of Tata’s mobility division by the largest telco in the country – Bharti Airtel. A person aware of the matter said: “The overall compensation will include Tata Teleservices’ 26% stake in ATC-controlled Viom Networks — valued at Rs 4,500-5,000 crore — that ATC will acquire and the additional amount as the cash component.”

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Tata’s payment of $900 million is very important since it had made clear with the conglomerate that it would clear up previous dues before proceeding on the terms that Bharti Airtel laid down in the agreement. Presently, Bharti Airtel makes use of the towers of its tower unit Bharti Infratel and Indus Towers, which is its joint venture with Idea Cellular and Vodafone India. Also, when ET threw some questions in ATC’s way the officials gave no response. Tata spokesperson also declined to comment.

During the negotiations, news floated that ATC had demanded a payment of a little more than a billion dollars as compensation for terminating 30,000 tenancies with ATC India and its unit Viom by Tata Teleservices. Also, as per ET’s report, ATC is keenly averse to any compromise on early termination compensation. Given that the bulk of the Tata Tele tenancies were based on long-term master service agreements (MSAs) valid till 2025 with 5-to-7-year lock-in periods, the American giant is surely not too happy about it and is now seeking compensation.