Tata Teleservices probable four way split is Chandra’s masterstroke

Tata’s, India’s leading conglomerate has announced that they have entered into an understanding to merge Consumer Mobile Businesses (CMB) of Tata Teleservices Limited (TTSL) and Tata Teleservices Maharashtra Limited (TTML) into Bharti Airtel.

With this merger, 40 million mobile customers of Tata Teleservices will join 381 million Bharti Airtel customer across its operations taking its customer base to 421 million. This is a win-win for Bharti Airtel as well as Tata Teleservices. Bharti Airtel got both customers as well as spectrum whereas for Tata Teleservices closing the telecom business was not an easy task. Given the circumstances, this was the best opportunity Tata’s could have offered to Bharti Airtel.

The press statement also said Tata is in initial stages of exploring combination of its enterprise business with Tata Communications and its retail fixed line and broadband business with Tata Sky. Any such transaction will be subject to respective boards and other requisite approvals. Tata will also retain its stake in Viom, and will take care of the liabilities associated with it.

For a long time, Tata Teleservices and Tata Teleservices Maharashtra enterprise operations have been working closely with Tata Communications and this is a done deal as enterprise business is doing extremely well for them. Tata Communications has been taking care of large customers whereas Tata Teleservices has been focusing on SMB segment. Tata Communications would be more than happy to get Tata Teleservices SMB business as this will help them to spread their portfolio from large sized clients to include SMB clients. The enterprise segment of Tata Teleservices is a profitable venture so whenever the deal happens in future it would not be a liability for Tata Communications as this is a done deal waiting for a formal announcement by both the boards.

As per the press statement, retail fixed line and broadband business of Tata Teleservices is in exploration stage with Tata Sky. I think this is also a done deal and only awaiting a formal announcement by both the boards. This is all the more necessary for Tata Sky as from a pure DTH or video player, the company wanted to focus on triple play services and the combination of Tata Teleservices retail fixed line and broadband business will help Tata Sky to provide broadband, Wi-Fi service, Android app and VoIP in the same way as Bharti Airtel and Airtel Digital TV joined hands to provide Internet TV, India’s first hybrid Set Top Box (STB).

Airtel ‘Internet TV’ is India’s first hybrid STB, powered by Android TV, which brings the best of online content to the TV screen along with a bouquet of over 500 plus satellite TV channels. Internet TV comes with inbuilt-Wi-Fi receiver, Bluetooth based remote control and is integrated with Google voice search feature. Customers can discover their favourite content by simply telling the remote and choose from a variety of content sources. Airtel ‘Internet TV’ STB requires a broadband or a 4G hotspot connection with a minimum recommended speed of 4 Mbps for a smooth online experience.

The announcement is expected to happen in future as it will help Tata Sky to come out with a hybrid box which will provide DTH, Wi-Fi service, Android app and VoIP thereby providing its customer with triple play service. If allowed by the respective authorities, the company can also focus on providing satellite broadband services such as Jupiter and Exude in future.

As per the press statement, Tata will also retain its stake in Viom and will take care of the liabilities associated with it. This is good for American Tower as in Viom, Tata has 26 per cent stake and 40 per cent tenancy in total of 40,000 towers which was transferred to American Tower. The VIOM – ATC deal also had Tata’s lock info 10 years of which 6 years is still remaining. There would be some concern for American Tower whether Bharti Airtel would use Bharti Infratel, Indus Towers or American Tower.

All this proves that N Chandrasekaran, Chairman, Tata Sons will probably play a masterstroke by giving each business unit to the respective leaders in their respective category and probably make 5,000 employees of Tata Teleservices smile.