This comes after Tata Sons Chairman, N Chandrasekaran, said Tata Teleservices was in a "really bad shape" with Rs. 31,000-crore debt.
As part of the agreement, Bharti Airtel will absorb Consumer Mobile Businesses (CMB) of TTSL and TTML across the country in 19 circles (17 under TTSL and two under TTML). The merger is expected to enable Bharti Airtel to further boost its spectrum foot-print with the addition of 178.5 MHz spectrum (of which 71.3 MHz is liberalised) in the 850, 1800 & 2100 MHz bands.
"This is a significant development towards further consolidation in the Indian mobile industry. It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies". It of course might have to fork out United States $ 1.2 billion to the government if it wants to liberalise the 1800 Mhz spectrum which its gets from TTSL but the choice of that will be with Bharti.
"Bharti Airtel will ensure quality services to Tata CMB's customers, while offering them the added benefits of its innovative product portfolio, access to superior voice & data services, mobile banking, VAS and domestic/ global roaming facilities".
Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation, noted Bharti Airtel in the news release.
Tata is also in initial stages of exploring combination of its enterprise business with Tata Communications and its Retail Fixed Line and Broadband business with Tata Sky.
Although the two companies have entered into an understanding, the acquisition of the mobile businesses by Airtel is pending regulatory approvals.
Tata will also retain its stake in Viom, and will take care of the liabilities associated with it.
An official statement reads, "The Boards of Tata Sons, TTSL and TTML separately approved this transaction".
Tata Teleservices and its unit Tata Teleservices (Maharashtra) Ltd have more than 40 million subscribers and rank ninth in India's telecoms market, which had a total of 1.2 billion mobile subscriptions at the end of July.