Foe turns friend: Tata Group, Reliance Industries may join hands over telecom unit

Tata Group is planning to sell its struggling telecom assets to the country's most valued company, Mukesh Ambani-led Reliance Industries. Bharti Airtel also remains a strong contender to acquire them.

The two groups haven't had many business ties in the past and even restricted recruiting employees from each other.

This started changing with Tata Trusts and Reliance Foundation collaborating in areas such as high-speed connectivity and cancer care. More recently, Tata bagged the Jamshedpur franchise of Indian Super League — a men's professional football league co-managed by Reliance Industries. 

"It's credible to say both Jio and Tata Teleservices have explored options, but risky to believe it would make progress," a person familiar with the matter told TOI.

Price wars and stiff competition have sparked off consolidation in the telecom industry, with Vodafone Group's Indian unit and Idea Cellular merging operations earlier this year. Bharti Airtel has also taken over the operations of Norwegian telecom company Telenor in six Indian states.

According to reports, 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. In June, UK research firm CCS Insight was the first report that M&A experts were betting on Bharti Airtel acquiring Tata Teleservices.

Chandrasekaran is said to be keen to reduce the over Rs 30,000 crore debt in Tata Teleservices after Tata Sons bought out Japanese partner NTT DoCoMo. Tata have had several discussions to sell off their telecom business in the past, including protracted talks with Vodafone before the UK-based transnational forged a merger with Idea Cellular.

Tata Group holds a majority stake in Tata Teleservices and 49 percent in the listed Tata Communications. It has 60 percent in Tata Sky with Rupert Murdoch and Temasek Holdings owning the balance.

CCS Insight, a global mobile and wireless sector intelligence provider, also says that by 2020, the Indian telecom industry could become a four operator market -- three private operators with Vodafone-Idea, Airtel and Jio, and state-run BSNL.