Tatas may have to pay government Rs90 billion for sale of mobile business to Airtel
03 August 2018
The Tata Group may have to shell out more than Rs90 billion to the government to get the go-ahead for the sale of its mobile phone business to Bharti Airtel, according to media reports.
A Bloomberg report on Friday said the Department of Telecommunications (DoT) is demanding that Tata Teleservices clear any obligations to the government before the deal with Bharti Airtel is cleared.
Another news report claims that Tata Sons has written to the DoT that the dues of Tata Teleservices arising out of spectrum-related charges and licence fees would be taken over by Tata Communications, or the parent company. The group wants to sell its consumer mobility business to Bharti Airtel.
The government also has a 26-per cent stake in Tata Communications (formerly state-owned VSNL), and the company will have to get its approval for the acquisition of dues.
The subscriber base of Tata Teleservices, according to data compiled by Bloomberg, has declined from 40.2 million to 27.6 million users in May. Bharti Airtel, which is also witnessing declining profits, will be acquiring the airwaves and users of Tata Teleservices in a debt-free, cash-free transaction.
According to reports, the DoT had raised similar demands for other dealers and mergers in the telecom sector. It sought Rs72.5 billion for the Vodafone-Idea Cellular merger. The two companies paid the amount under protest.
Reliance Communications, which plans to sell its airwaves, towers and fibre to Reliance Jio, has been asked to furnish Rs7.74 billion in bank guarantees. Failure to do so will result in the cancellation of its licence.
Last year, the Tatas paid $1.2 billion to NTT DoCoMo of Japan for its 26.5-per cent stake in Tata Teleservices.