Airtel May Buy Tata Tele, Jio-RCom Likely to Merge by 2020: Report

India’s top telco Bharti Airtel may acquire ailing telco Tata Teleservices, while Reliance Jio and Reliance Communications are likely to combine their businesses in a longer term, according to a report by London-based CCS Insight. The ongoing and these expected merger and acquisition moves will result in a four-operator market in the next three years, down from 15 licensed providers in 2010, a report in Times of India said.

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“From structuring and approval perspectives, the easiest transaction would be for Tata Teleservices to be subsumed by Bharti Airtel. Our view is that the main alternative is a tie-up with BSNL, but other combinations exist, such as a complex merger with the Reliance Communications-Aircel business,” said the report.

“Given the current state of the market, coupled with the trend toward consolidation, an acquisition by Jio looks inevitable. The newly-merged Reliance Communications-Aircel is the obvious choice. But we are dealing with a complex relationship between two siblings. This emotional factor will be the principal element in any future transaction,” the report said.

The agency, which conducted a survey with 57 telecom M&A influencers, also said that Tata Tele might also alternatively look at merging operations with state-run telco BSNL, providing the latter with a route to privatisation. The alternate move is fairly possible given Tata Group’s history with state-owned telecom companies. For instance, Tata Group’s international voice and data arm, Tata Communications had previously acquired Videsh Sanchar Nigam, which was a state-owned equivalent company.

The agency report said that India would have three private providers each with more than 300 million subscribers and one state-owned operator with over 100 million by 2020.

Bharti Airtel is already in a process to acquire Indian operations of Norway-based Telenor Group and is also buying 4G spectrum and business of Tikona Digital, aimed at strengthening footprint and reach in the market ahead of Vodafone-Idea Cellular merger, which upon completion will create India’s largest telco by dislodging the Sunil Mittal-led telco.

However, a top industry analyst told ToI that there is a little business sense for Airtel to buy the loss-making Tata Tele. “The only reason for Airtel to consider a deal with the Tatas will be to maintain leadership in revenue market share. The deal between Vodafone and Idea threatens to take Airtel’s leadership here, and thus Sunil Mittal may counter this through such deals if they come at an attractive price,” he was quoted was saying.

Tata Tele has revenues of around Rs 9,500 crore. The telco’s loss widened to Rs 4,617 crore for FY17, from a loss of Rs 2,023 crore the year before. The telco’s net worth eroded by Rs 11,653 crore at the end of the financial year ended March 2017. Tata Tele recently approached its lenders, including the State Bank of India (SBI), to seek a restructuring of its debt, becoming the second telco to seek debt restructuring after Anil Ambani-owned Reliance Communications (RCom). The telco wants bankers to restructure about Rs 30,000-crore of its total Rs 40,000-crore debt, which includes Rs 8,000-crore of deferred spectrum payments.

According to the CCS Insight report, Mukesh Ambani-led Jio’s impact on other mobile operators has been startling, with its assertive moves since launch doing little to subdue the chaos of the Indian market.

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30 Comments on "Airtel May Buy Tata Tele, Jio-RCom Likely to Merge by 2020: Report"

 

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[…] as Tata DoCoMo network in India has been in the talks with India’s leading telecom operator Bharti Airtel for a possible merger. And now, a new report says that the Tata Group and Bharti Enterprises have had exploratory talks […]

chetan
June 29, 2017 10:35 am 10:35 AM

Did i heard just right? Rcom offers to surrender 1800, 2100 Mhz spectrum acquired through Auction to Telecom Ministry. WHAT?????????

Kunal
June 29, 2017 3:02 pm 3:02 PM
They won’t. ..as their tower deal will be blocked & most probably lost….. they have promised certain tenancies to brookefield which they can not deviate . Other side , may be the overlapping spectrum in 2100 mhz ( 5 circles) between aircel & rcom may be offerred back to government & same for 1800 mhz . Returning of expensive spectrum to government will be logical , as no existing players interested in buying at present on past high valuations. Spectrum prices are bound to drop , as there won’t be much demand & consolidation in the sector will leave the… Read more »
Kaushik
June 29, 2017 2:07 pm 2:07 PM

It may be possible that they’ll sell excess spectrum of 2100 MHz wherever they have more than 5 MHz. And the same situation with 1800 MHz. So that will leave Jio’s spectrum pool to handle the 4G needs. They may also do away with 1800 in circles where they have 900 MHz so that they can maintain 2G and 3G continuity.

Kaushik Roy
June 28, 2017 9:21 pm 9:21 PM

Jio should buy AVOID group and end Competition.

abhishek mittal
June 29, 2017 9:10 am 9:10 AM

Kitne rs kilo mw kharide

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