Mumbai: Straight after Telenor ASA decided to give mobile business of India to Airtel for free, the Tata group has gone the same route.
The Tatas are transferring at least a $1 billion business to Airtel for free. Telenor’s annualized revenues stood at $606 million in the June quarter.
As a matter of fact, the Tatas have gone a step further compared to Telenor. For the latter, Airtel agreed to take over outstanding spectrum payments, other operational contracts such as tower leases and employees.
The main factor why Airtel is able to strike such deals is that it is the only buyer in the market. Vodafone India Ltd and Idea Cellular Ltd have enough on their plate with their own merger, and the last thing they would want to engage with is the integration of another telco.
Furthermore, Reliance Jio Infocomm Ltd, after having spent Rs2 trillion already in building its network, appears self-sufficient. Of course, these are also distress sales, given the high-cash burn at these companies. For sellers, therefore, one big hope is if Airtel evinces some interest. The only other option is to wind down the business, which entails far higher costs.