Airtel, Tata Tele mobile businesses to merge

New Delhi: The merger announcement between Tata Teleservices and Bharti Airtel is good news for both the parties involved, as also for India’s hyper competitive telecom industry. It saves Tatas the blushes, since the only other option would have been to wind down the loss making, debt laden business, something the Tata group has never done in its 150-year existence. The deal is a thumbs up for the Tata legacy. For Bharti, it is a Diwali gift since the acquisition brings with it added revenue market share at virtually no cost.

As someone pointed out after the deal was announced, Bharti has bought the Tatas’ business “for free” and perhaps made some money also in the process! As for the telecom market, stakeholders will probably heave a sigh of relief since the deal means there will only be three serious players left in a hyper competitive market – Bharti Airtel, the Vodafon-Idea combine and Reliance Jio Infocomm – which should mean reduced competitive activity and better revenue generation in the long run.

India’s telecom market has been losing revenue these last few quarters, with intense fare wars, and consolidation was the only viable option. In a furious though unprecedented wave of consolidation, the smaller telecom operators are being bought over by the biggies. In the end, perhaps only three or four big operators will survive but then, that is a good sign since this has been the norm in most mature markets.

This piece in NDTV quotes data from TRAI to say that Tata Teleservices was ranked ninth among 11 operators, with a market share of 3.55 percent as of July. The top three telecom operators — Bharti, Vodafone India and Idea Cellular — control almost 60 percent of the market. Reliance Jio now has about 11 percent of the market, ranking it fourth. Consolidation is the only sensible and indeed viable way to remain in business.


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