Airtel to acquire Tata’s telecom services for FREE!
Bharti Airtel announced on Thursday that it will absorb Tata’s telecom business. The merger that has shaken up the telecom industry by a surprise will give Airtel an advanced lead when it comes to the customer base. The biggest thing that has created all the chaos is that Tata’s telecom business is being absorbed by Bharti Airtel for free. Tata is yet to finalise the points of the deal in another five weeks but what we know so far is that the Tata Sons which is the parent company of Tata’s telecom business will settle all the past debts for the company before Bharti Airtel absorbs it. This might be a surprising thing to hear but is also a better deal for Tata in many ways. Closing down the business will cause Tata a whopping 8000 crores when the company is already in huge debts. By letting Bharti Airtel to absorb its company Tata has ensured that none of the stakeholders lose money.
Market share after Airtel-Tata merger?
Bharti Airtel is the largest Telecom in India which is the world’s second largest market with some rock bottom prices. By absorbing Tata’s telecom business Bharti Airtel will gain more lead of about 40 million customers. In February 2017 Telenor also announced its company will be absorbed by Bharti Airtel for free the same way as Tata. As there are no other buyers in the market Bharti Airtel enjoys a very dominant position in the negotiations.
Vodafone and Idea are India’s second and third largest telecoms respectively after Airtel. They have also announced a merger a while back and together the companies will form India’s largest telecom company. The current market share of Vodafone and idea is 20% and 16% respectively while Airtel enjoys a huge 26%. Tata has a feeble 4% market share.
JIO the newest telecom in India holds a very respectable 11% market share considering it has been in the country for only a while. JIO offers only 4G services and is expanding to rural areas rapidly to compete with Airtel.
R-Com and Aircel were also supposedly going to merge their business but the deal fell through due to legal uncertainties. R-Com decided to pay off its debts by monetising its company tower and real estate assets.
Tata had merged its services with the Japanese company NTT Docomo. The legal battle between Tata and Docomo went on for four years and resulted in Cyrus Mistry being removed as Tata’s Chairman.
Read about R-Com and Aircel merger call off here: