KOLKATA | MUMBAI: American Tower Corp<\/a> has dismissed a request by Tata Teleservices<\/a> to waive almost Rs 2,000 crore in early tenancy termination penalties, setting the stage for protracted negotiations that may delay Bharti Airtel<\/a>'s takeover of the Tata Group's wireless business, two people said.
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Tata Teleservices may have to shell out as much as Rs 7,000 crore for prematurely winding up some 30,000 tenancies with ATC<\/a> India and its unit Viom Networks<\/a> following its decision to sell the wireless business to Sunil Mittal-led Bharti Airtel<\/a>.
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\nTata Teleservices is said to be trying to convince ATC to accept its 26% stake in Viom Networks, which it values at about Rs 5,000 crore, as penalty and waive the rest. However, the US tower company has demanded both the stake and payment amounting to compensation worthRs 7,000 crore, one of the people said.
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\nThere are differences over the valuation of the stake in Viom, which is majority owned by ATC. The US tower company is reckoned to have pegged the 26% holding at Rs 4,000 crore, which means the compensation payment component would increase to Rs 3,000 crore, the people said.
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\n“While ATC is keen on an amicable settlement with the Tatas, who are an old client, it is unlikely to compromise on compensation since the bulk of the Tata tenancies are based on long-term master service agreements valid till 2025 with 5-to-7-year lock-in periods,” one of them said.
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\nAny time-consuming negotiations with ATC could delay the transfer of Tata Teleservices' wireless business to Bharti Airtel, the people said. The Tatas had agreed to meet all liabilities from earlier agreements.
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\nA Bharti group spokesman said there is “no deadline” to conclude the transaction.
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\n“Everything is progressing well. We are awaiting Sebi approval to file the merger application with the National Company Law Tribunal,” the Bharti spokesman said in a written response to ET's queries.
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KOLKATA | MUMBAI: American Tower Corp<\/a> has dismissed a request by Tata Teleservices<\/a> to waive almost Rs 2,000 crore in early tenancy termination penalties, setting the stage for protracted negotiations that may delay Bharti Airtel<\/a>'s takeover of the Tata Group's wireless business, two people said.
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Tata Teleservices may have to shell out as much as Rs 7,000 crore for prematurely winding up some 30,000 tenancies with ATC<\/a> India and its unit Viom Networks<\/a> following its decision to sell the wireless business to Sunil Mittal-led Bharti Airtel<\/a>.
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\nTata Teleservices is said to be trying to convince ATC to accept its 26% stake in Viom Networks, which it values at about Rs 5,000 crore, as penalty and waive the rest. However, the US tower company has demanded both the stake and payment amounting to compensation worthRs 7,000 crore, one of the people said.
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\nThere are differences over the valuation of the stake in Viom, which is majority owned by ATC. The US tower company is reckoned to have pegged the 26% holding at Rs 4,000 crore, which means the compensation payment component would increase to Rs 3,000 crore, the people said.
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\n“While ATC is keen on an amicable settlement with the Tatas, who are an old client, it is unlikely to compromise on compensation since the bulk of the Tata tenancies are based on long-term master service agreements valid till 2025 with 5-to-7-year lock-in periods,” one of them said.
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\nAny time-consuming negotiations with ATC could delay the transfer of Tata Teleservices' wireless business to Bharti Airtel, the people said. The Tatas had agreed to meet all liabilities from earlier agreements.
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\nA Bharti group spokesman said there is “no deadline” to conclude the transaction.
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\n“Everything is progressing well. We are awaiting Sebi approval to file the merger application with the National Company Law Tribunal,” the Bharti spokesman said in a written response to ET's queries.
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\nAt press time, ATC had not responded to ET's queries. A Tata spokesperson declined to comment.
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\nATC had acquired 51% in Viom from Kolkata-based Srei group and Tata Tele for Rs 7,600 crore in April 2016. After merging Viom's 42,000 telecom towers with its India operations, ATC took a 65% stake in the JV and the Tatas had 26%. The remainder is held by IDFC and Macquarie. Viom was recently rechristened ATC Telecom Infrastructure.
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\nInsiders at the salt-to-steel Indian conglomerate said Tata Teleservices may have to seek approval from the Tata Sons board if additional funds are needed to compensate ATC. “Getting internal approvals itself may not be easy,” another person familiar with the development said.
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\nThe proposed deal with Airtel for practically free has caused some heartburn within sections of the Tata Group's telecom company, insiders said. Separately, anear $1billion offer by a consortium led by investment firm TPG Global for the optical fibre assets of Tata Teleservices in January is yet to move forward.
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\n“Telecom is a complicated sector. The haste last year to declare ‘victory' over the Tata Group's telecom troubles now clearly seems misplaced, with even the Airtel and TPG transactions hanging fire and not being closed,” an external commentator close to the group said.
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\nUnder the agreement signed in October, Tata Tele's consumer mobile business — with over 40 million subscribers, majority of 5,000 employees and about 178.5 units of airwaves — across 19 circles will be transferred to Airtel on a cash-free, debt-free basis.
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\nThe deal is slated to bolster the Mittalled telco's 4G airwaves capacity.
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