Tata may have to pay Rs 90 bn to govt for selling mobile business to Airtel

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New Delhi, Aug 3: Tata Group may have to pay around Rs 90 billion ($1.3 billion) in dues to the Indian government to rescue the proposed sale of its mobile-phone business to Bharti Airtel Ltd., people familiar with the matter said.
The Department of Telecommunications (DoT) is demanding that Tata Teleservices Ltd. clear any obligations to the government before it approves the deal that was struck in October, the people said, asking not to be identified as the information isn’t public. Bharti Airtel, helmed by billionaire Sunil Mittal, is unlikely to agree to pay the sum, two of the people said.
Selling its indebted loss-making carrier will ease Tata’s exit from a sector that’s been ravaged by a scathing tariff war, escalated by the entry of Reliance Jio Infocomm Ltd. in 2016. The competitive field has since shrunk from a dozen operators to one dominated by three large players, as smaller rivals quit, merged or went bankrupt.
Emails sent to Bharti Airtel and telecom ministry seeking comments went unanswered. Tata Group declined to comment.
The situation is fluid, and the amount of the dues could change, according to the people with knowledge of the matter. Tata Group has been urging the telecom ministry to reduce the amount it’s asking for, one of the people said. The $100 billion coffee-to-cars conglomerate is also preparing contingency plans to wind down the business in the worst-case scenario, another person said.
Declining Profit
Bharti Airtel, which has posted nine straight quarters of declining profit, agreed to acquire Tata Teleservices’s airwaves and users in a “debt-free cash-free” transaction, with an understanding that past liabilities will be settled by the Tata group.