Info-tech

DoT seeks ₹8,500 crore as bank guarantee for Airtel-Tata Teleservices merger

Ronendra Singh New Delhi | Updated on April 11, 2019 Published on April 11, 2019

Airtel may approach TDSAT opposing the conditional nod, say industry experts

The Department of Telecommunications (DoT) has approved the merger of Tata Teleservices (TTSL) and Tata Tele Maharashtra (TTML) with Bharti Airtel, subject to the condition that the latter furnishes a bank guarantee of around ₹8,500 crore, said official sources on Thursday.

The National Company Law Tribunal (NCLT) in January had approved Airtel’s acquisition of TTSL mobility business, but said the merger would be subject to the approval by the DoT.

4G network

The merger will help Airtel strengthen its 4G network and compete with Reliance Jio as the Sunil Bharti Mittal-owned firm gets additional spectrum pool of 178.5 MHz in the 1800, 2100 and 850 MHz bands.

The merger arrangement involves TTSL, Airtel and Bharti Hexacom (a subsidiary of Airtel).

As part of the agreement, Airtel will absorb TTSL’s operations in 19 telecom circles (17 under TTSL and 2 under TTML).

A conditional nod for the merger was approved by Telecom Minister Manoj Sinha on Tuesday and it has been received by Airtel on Wednesday late evening, said sources close to the development.

“There is a confirmation of Airtel receiving the letter late last night (Wednesday) and now a response is awaited,” a government source told BusinessLine.

Joint undertaking

In the letter, the DoT has asked Airtel to furnish a bank guarantee of a total of ₹8,500 crore and both the companies will submit an undertaking on matter related to court cases before the merger is taken on record, the official said.

The merger will be taken on record after Airtel submits the bank guarantee for one-time spectrum charges and the rest for the deferred payment of spectrum that would be acquired from TTSL. According to industry experts, Airtel may go to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) opposing against the bank guarantee, like it did while merging Telenor’s business last year.

Telenor acquisition

During the acquisition of Telenor also, Airtel had approached the TDSAT against the DoT’s order of bank guarantee of around ₹1,700 crore as a condition for the merger, in which Airtel had won the case.

The DoT had later moved to Supreme Court challenging the telecom tribunal’s order and which the apex court directed the government to clear its merger with Telenor without requiring Airtel to provide a ₹1,499 crore bank guarantee.

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Published on April 11, 2019
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