India's Tata Group has explored selling its struggling telecom and related assets to Reliance Industries Ltd (RIL) even as Bharti Airtel remains a strong contender to acquire them. While talks with RIL chairman Mukesh Ambani's Reliance Jio may not progress, it assumes significance for being the first such deal talk between the country's two corporate giants.
The two groups haven't had much business connections in the past and even restricted recruiting employees from each other. The last decade's telecom battles saw Tatas and Ambanis pitched on opposite sides. This started changing with Tata Trusts and Reliance Foundation collaborating in areas such as high-speed connectivity and cancer care.
RIL and Tata Group declined to comment. “It's credible to say both Jio and Tata Tele have explored options, but risky to believe it would make progress,” said a person familiar with the matter. The Indian telecom industry is gripped by consolidation moves - three deals have been announced in the first half of the current calendar - as the Jio onslaught has hit the bottom lines of competitors hard.
New Tata chairman N Chandrasekaran is working on a time-bound plan to sort out the telecom mess, and has asked his deal-makers to explore all options. Tata Group holds a majority stake in Tata Tele and 49% in the listed Tata Communications. It has 60% in Tata Sky with Murdoch and Temasek owning the balance. Anil Ambani's RCom is also learnt to have evinced interest in Tata Tele but its own debt woes and an uncertain merger with Aircel is seen as weighing down on further deal-making.
The Indian telecom industry could become a four operator market by 2020, according to CCS Insight, a global mobile and wireless sector intelligence provider. This envisaged three private operators -Vodafone-Idea, Airtel and Jio - with BSNL as the fourth entity.
Chandrasekaran is said to be keen to reduce the over £3 billion debt in Tata Tele after Tata Sons bought out Japanese partner NTT DoCoMo. The group's holding company, Tata Sons, recently decided to infuse £1.2 billion in the telecom arm to improve its financial metrics.