Tata Teleservices is reportedly in talks with RCom-Aircel and MTS combined entity, for a merger to counter the rising competitive pressure triggered by the launch of Reliance Jio Infocomm, reports The Economic Times today.
Tata Teleservices and Reliance Communications-Aircel-MTS combine are reportedly considering joining forces to counter the tough competition from Reliance Jio Infocomm, reports the Economic Times today. Anil Ambani, Chairman of the Reliance Group, is believed to have initiated talks on the matter with the newly-appointed Tata Sons’ Chairman N Chandrasekaran.
The launch of Jio has triggered intense competition and a phase of consolidation in the industry. Incumbent majors Vodafone and Idea Cellular are already in advanced stages of working out a merger.
If RCom has its way then the combined entity (with the four players RCom-Aircel-MTS-Tata Tele) will become the third largest telecom player in the country after the proposed Vodafone-Idea combine and Bharti Airtel.
There are, however, two hurdles that might delay the process; Tata Tele’s debt on books of Rs 30,000 crore and the legal issues on NTT Docomo’s exit from the company.
While an ET report last week reported Tata Sons' likely plans to infuse capital of nearly Rs 10,000 crore to clean up Tata Tele’s balance sheet, sources within Tata group suggest the company has already arrived at a board resolution to either sell the telecom business or shut down the operations gradually.
Of the 12 telecom players in India, Tata Tele ranks ninth with a subscriber base of roughly 53 million. If the merger with RCom-Aircel goes through, then the combined entity will have around 260 million subscribers and a revenue market share of over 18 percent. This compares with Airtel’s 266 million users and 31 percent share, Vodafone’s 205 million users and 23 percent share and Idea’s 190 million users with 19 percent revenue market share.
(Disclosure: Reliance Jio Infocomm is part of Reliance Industries, which also owns Network18 Media and Moneycontrol)