After the deal, Bharti Airtel's customer base will go up from 281 million to 321 million, while the revenues will go up by 10 per cent and take the combined market share up to 41.5 per cent of telecom sector revenues.
As part of the agreement, Bharti Airtel will absorb Consumer Mobile Businesses (CMB) of TTSL and TTML across the country in 19 circles (17 under TTSL and two under TTML).
In the official statement released to the press, Tata also revealed that it was in early stages of exploring a combination of the Tata Teleservices' enterprise business with Tata Communications and its retail fixed-line and broadband services business with the Tata Sky satellite TV division.
Bharti Airtel chairman Sunil Bharti Mittal said: "This is a significant development towards further consolidation in the Indian mobile industry. Tata customers will be able to enjoy India's widest and fastest voice and data network, and bouquet of Airtel's best-in-class products and services". Airtel, for which this is the seventh acquisition in five years, will gain access to around 180 MHz of spectrum spread across 850 MHz, 1800 MHz, and 2100 MHz bands. "It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders", he added.
Commenting on this merger, N Chandrasekaran, Chairman of Tata Sons, said, "We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders".
"Assuming the deal completes in 2018, the headroom on Bharti's BBB- ratings will improve slightly, as we expect FFO-adjusted net leverage to be around 2.0x-2.1x in the financial year ending March 2019 compared with our expectation of 2.1x-2.2x at FYE18", Fitch said in a statement Friday.
The companies said the deal is on a no-debt, no-cash basis, implying Airtel is not taking over any of the about Rs 40,000 crore debt with Tata Teleservices and is neither paying any cash.
Airtel will take over a small part of Tata Telecom's deferred spectrum liabilities of $1.5 billion. Besides, partner NTT DoCoMo too made a decision to pull the plug from Tata Teleservices. Besides, Airtel will have the right to use Tata's existing fibre network of Tata. "It is a win-win deal for both", Rajan S. Mathews, director general, Cellular Operators' Association of India, told IANS. However, Tata Sons will have valuable assets left with it after the demerger of the fixed line, enterprise and broadband businesses that are still with Tata Tele. This would help Airtel in bolstering its air-wave strength as well as narrow the gap between the proposed Vodafone-Idea merger in terms of subscriber as well as revenue market share.