MUMBAI • Shares of Bharti Airtel, an associate of Singtel, surged the most in five months after it announced that it had agreed to absorb Tata Group's mobile-phone business in a transaction shaking up one of the world's most crowded cellphone markets.
The stock yesterday advanced 7.8 per cent to 431.60 rupees (S$9), the most since May 10, after India's largest mobile-phone operator said it will get Tata Teleservices' airwaves and 40 million customers in a "debt-free, cash-free" merger.
Tata will settle past liabilities to pave the way for Bharti, led by billionaire Sunil Bharti Mittal, to complete what it describes as effectively a merger, according to a statement issued on Thursday.
Singtel is the second-largest shareholder of Bharti, with a stake of 36.2 per cent.
Tata will finalise the structure of the deal with Bharti in the next five weeks, Tata group chief financial officer Saurabh Agrawal said in an interview.
"The consideration we're getting is that instead of closing down the business, we are taking care of every stakeholder," he said. "Frankly, this business should have been restructured a long time back. We lost the industry position a while ago and we never recovered."
The world's No. 2 mobile-phone market with some of the lowest tariffs on the planet has long been ripe for an overhaul, with almost a dozen carriers vying for customers.
Number of Tata Teleservices customers which Bharti Airtel says it will get in the "debt-free, cash-free" merger.
Then Reliance Jio Infocomm roiled the industry by jumping into the fray last year with free calls for life and free data for a limited period.
Bharti said it will assume some small liabilities related to spectrum.
Tata will retain its stake in Viom Networks, a tower company, and the group is exploring merging its enterprise business with Tata Communications, according to the statement.
Parent firm Tata Sons will repay all the debt that Tata Teleservices has, Mr Agrawal said.
Tata Teleservices was ranked ninth among India's 11 carriers, with a market share of 3.55 per cent as of July, according to the latest data from the nation's telecom regulator.
The top three carriers - Bharti, Vodafone India and Idea Cellular - control almost 60 per cent of the market. Jio now has about 11 per cent of the market, ranking it fourth.
Jio's entry into the market sparked the latest shake-out.
In March, Vodafone and Idea announced that they would merge operations in India to create the nation's largest carrier.
In February, Telenor said it would sell its India unit to current market leader Bharti.
Reliance Communications had planned to merge with Aircel but the deal fell apart earlier this month.
The industry overhaul may be far from over. "The telecom sector is undergoing a very turbulent and difficult phase," billionaire Kumar Mangalam Birla, the patriarch of the group that controls Idea, said in an interview this week.
"Probably the fittest three will survive."