Loss-making Tata Teleservices Ltd and Tata Teleservices Maharashtra Ltd will merge their mobile operations with Bharti Airtel Ltd.

Over 40 million Tata customers will join Bharti Airtel.

The merger is being done on a debt-free, cash-free basis, except for Bharti Airtel assuming a small portion of Tata's unpaid spectrum liability towards DoT, which is to be paid on deferred basis.

Merger would bolster Bharti Airtel’s spectrum pool with significant additional spectrum in the 1800, 2100 & 850 MHz bands, all widely used for 4G.

The transaction will also provide Bharti Airtel the right to use Tata’s existing fibre network.

Tata Tele will retain its stake in tower business Viom and take care of associated liabilities.

As part of the agreement, Bharti Airtel will absorb Tata mobile operations across the country in 19 circles (17 under TTSL and 2 under TTML).

Tata and Bharti Airtel will work together to further explore other mutual areas of cooperation that would ill be value accretive for both the groups.

The employees of Tata will be demerged on the lines of the two businesses i.e. mobile business and EFL (Enterprise and Fixed Line and Broadband), and post an optimal manpower planning will be moved accordingly.

Tata is also 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 approval by respective boards and other requisite approvals.

Sunil Bharti Mittal, Chairman, Bharti Airtel, said, “This is a significant development towards further consolidation in the Indian mobile industry and reinforces our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust technology and solid spectrum portfolio".

"The acquisition of additional spectrum made an attractive business proposition. It will further strengthen our already solid portfolio and create substantial long-term value for our shareholders given the significant synergies.”

The Bharti board, which met this afternoon, has approved this transaction.

N Chandrasekaran, Chairman, Tata Sons, said, “We believe today's agreement is the best and most optimal solution for the Tata Group and its stakeholders. Finding the right home for our longstanding customers and our employees has been the priority for us. We have evaluated multiple options and are pleased to have this agreement with Bharti.”

The boards of Tata Sons, TTSL and TTML have approved the transaction.

Goldman Sachs (India) Securities Pvt Ltd was the financial advisor to Tata.