Tata Sons has stepped up to pay the lion’s share of Tata Teleservices INR100 billion ($1.4 billion) debt to the Indian government, despite Bharti Airtel being formally obliged to do so.
Airtel is currently in the process of acquiring TTSL’s mobile unit, and as such had informed the Department of Telecommunications (DoT) that it would assume responsibility for the debt, which is comprised of licence payments, usages fees and standalone charges for spectrum.
However, the Economic Times reports that since Tata Sons is selling the unit “cash- and debt-free”, it will “likely” cover the sum as the group is reportedly aiming to divest the beleaguered mobile unit as quickly as possible.
The TTSL mobile unit is an asset to Airtel as it will gain both spectrum and customers that will enable it to compete more effectively against the new market leader Vodafone Idea, as well as shore up its position against third-placed Reliance Jio.
The deal is set to close once the DoT approves it, although India’s regulator TRAI has noted that the debt must be paid by the licence holder – hence Airtel’s willingness to pay even if Tata Sons provides the funds.