The merger of Tata Teleservices with Bharti Airtel is another feather in the cap of N Chandrasekaran, chairman of Tata Sons. Tata Teleservices was one of the 'legacy hotspots' -- as previous chairman Cyrus Mistry called it -- of the Tata group with a negative net worth of Rs 11,650 crore and a debt of Rs 28,800 crore.
Chandrasekaran, about a month back, got away with another headache -- Tata Steel Europe, announcing its merger with Germany's thyssenkrupp AG. According to the deal, Tata Steel will move 2.5 billion euros debt to the merged entity along with another 4 billion euros of pension and other legacy liabilities.
The merger of Tata Tele with Bharti Airtel will create India's second 300-million-customer-base company, placing next to the largest combine of Vodafone- Idea. Airtel has about 265 million customers in the country and the number will go up to 305 million after adding the 40 million customers of Tata Tele. The new entrant Reliance Jio has fast grown to 130 million customers since its launch last year. The Vodafone-Idea combine has 390 million customers.
After merger Bharti Airtel will get additional spectrum in 1800, 2100 and 850 MHz bands, which are widely used for 4G. In return, Airtel will have to assume only a small portion of the unpaid spectrum liability of Tata. The transaction will also provide Airtel access to Tata's existing fibre network.
Tata Tele's debt of Rs 28,800 crore will be settled by Tata group. Tata will retain its stake in Viom and take care of associated liabilities -- American Tower Company (ATC) owns 51 per cent stake in Viom while Tata Tele holds 33 per cent and Tata Sons 2 per cent.
Now the unresolved issue before Chandrasekaran is the losses in the passenger car business, including that of Nano.