Is there life after the merger?
Tata Docomo was an Indian consumer mobile business that sold telecom services under its parent company, Tata Teleservices. In 2019, the company was bought out by Airtel, the third-largest provider of telephony services in India. Airtel has more than three hundred million members, including the forty million members that it subsumed when it bought out Tata Docomo. With the acquisition of Tata Docomo, Airtel has a twenty-eight percent share of the Indian telecom marketplace.
Tata Docomo had been losing market share and struggling with its debts for some time, though its service was popular with consumers,
SIM Card Controversy
The civil court of cyber crimes ordered Tata Docomo to pay out more than eight hundred thousand rupees in compensation to the victim of a SIM swap fraud scheme in the year 2015. The company issued a duplicate SIM card to a person who committed fraud against Dattatraya Utekar. The SIM card allowed a criminal to steal massive amounts of cast from Utekar’s bank account through online banking. They had used false documents to gain a copy of the SIM card from Tata Docomo.
Originally, Tata Docomo blamed the bank that the victim used for the access that the criminals had gained to Utekar’s account. The withdrawals could only happen if the criminals made it through three levels of security. However, the court found that the ICICI Bank had indeed followed proper procedures and that Tata Docomo’s SIM card had transferred the security protocols.
It’s widely viewed that this case used Tata Docomo to make a public point and deter other telecom providers from allowing security measures to become lax on their own SIM services. This type of fraud is relatively new, though it has been increasing as criminals become more adept at taking advantage of loopholes in technology.
The scandal surrounding Tata Docomo’s involvement in the fraud scheme isn’t a central part of its devaluation, however, it’s thought to have been a contributing factor.
The major factor in Tata Docomo’s dire straits has to do with its unpaid spectrum liability.
In 2017, Bharti Airtel announced that it wanted to buy the consumer mobile business arm of Tata Teleservices Maharashtra and Tata Teleservices in a cash-free, debt-free acquisition deal. Basically, the deal would be free for Airtel, with the buyer only gaining Tata Docomo’s spectrum liability payments that were still outstanding. Under the deal, Tata Docomo would continue to operate its fixed-line, broadband business, enterprise, and tower aspects.
Later that year, the deal was approved by the Competition Commission of India. That allowed Bharti Airtel to seek approval from its shareholders, an essential part of the process for this publicly held company. The merger gained final approval early in 2019.
It wasn’t just Tata Docomo that was part of the deal, the company was also approved to merge with Tata Teleservices Maharashtra Limited and Tata Teleservices. The merger went into effect on July 1, 2019.
What this buy out shows is that there is indeed life after the merger. Tata Docomo remains and independent provider in that its branding and its customer service will stay intact, at least for the near future.