Tata joins the queue for consolidation, Vodafone/Idea merger announcement due shortly

20 Feb 2017

Tata Group has reportedly joined the ranks of Indian cellcos racing towards consolidation, having started talks with Reliance Communications (RCOM) regarding the possibility of joining the mega-merger of RCOM, Aircel and Sistema Shyam TeleServices (SSTL, which operates as MTS India). The Economic Times cites people familiar with the matter saying that the two parties have discussed the matter, but nothing has been finalised yet. Tata Teleservices Limited’s (TTSL’s) debts of around INR300 billion (USD4.46 billion) would be a major sticking point for any tie-up, however, whilst the issue of NTT DOCOMO’s exit from TTSL would also need to be resolved before a merger could take place. According to the sources, Tata Group already has a board resolution for a sale or gradual shut down of its telecoms business, and the company is unlikely to take an equity stake in the enlarged entity if a merger were to take place.

In another India M&A development, Vodafone India and Idea Cellular are expected to finalise a merger agreement within the next month, the Economic Times cites unnamed sources as saying. The merged entity is expected to have to make some concessions to comply with regulations on spectrum caps and revenue market share limits in certain areas.