MUMBAI | NEW DELHI: The Tata Group has agreed to sell its mobile business to Bharti Airtel for free, ending the salt-to-software conglomerate’s long-standing attempts to rid itself of this loss-making venture while bolstering the market share and 4G airwaves capacity of the Sunil Mittal-led company.The deal, which has been done on a ‘debt-free, cash-free basis’ will intensify the consolidation process underway in the telecom industry, which has now come to be dominated by three players — the Idea-Vodafone combine, Bharti Airtel and Reliance Jio. Once the Idea-Vodafone merger is closed, Airtel will slip to the No. 2 position in the Indian market, and the acquisition of the Tata Teleservices wireless operations will help it to narrow the gap with the merged entity.The news about the deal was first reported on www.economictimes.com on Thursday afternoon, ahead of the formal announcement.In a joint statement on Thursday, the two sides further said that they “will work together to further explore other mutual areas of cooperation, that will be value accretive for both the groups”, suggesting an alliance around their DTH, enterprise, and overseas cable businesses could be in the offing in future.N Chandrasekaran, chairman, Tata Sons, said, that the deal was the best possible for the Tata Group and its stakeholders. “Finding the right home for our longstanding customers and our employees has been the priority for us,” said. In an interview to ET published earlier this week, the Tata Sons chairman had described the debt-plagued Tata Teleservices as ‘one of the big problems’ he had to deal with. “We will either have to sell it or have a graceful exit,” he had said.Bharti Airtel chairman Sunil Mittal said the deal would strengthen his company’s market position in several key circles. “On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side,” he said.Under the contours of the present deal, Tata Teleservices’ wireless operations — consumer mobile business — with over 40 million mobile subscribers, majority of 5,000 employees, and around 178.5 MHz of airwaves — nearly 40% of which are 4G ready — spread across 19 circles will be transferred to Bharti Airtel on a cash-free, debt-free basis, the two companies said in the statement. Tata Teleservices also runs enterprise and fixedline & broadband businesses.“The merger is being done on a debt-free cash-free basis, except for Bharti Airtel assuming a small portion of the unpaid spectrum liability of Tata towards DoT, which is to be paid on deferred basis,” the two companies said. “All past liabilities and dues to be settled by Tata,” their joint statement said, referring to the roughly Rs 31,000 crore on Tata Teleservices’ books.A person familiar with the matter said that Bharti Airtel will take care of roughly Rs 1,500-2,000 crore of the Rs 10,000 crore airwaves auction payments that Tata Teleservices needs to make to the government over the next few years.The Tata-Bharti discussions have gone through various twists and turns. Talks between Chandrasekaran and Mittal were initiated soon after the former took over as the chairman of Tata Sons about six months ago. As this newspaper reported on July 7, the two sides were in discussions to evaluate a mega alliance involving their telecom, overseas cable and enterprise services, and direct-to-home TV businesses. But the talks fell through as Airtel did not want to get bogged down in a multi-play buyout involving huge debt and multiple stakeholders. This was reported by this newspaper on August 4.The two parties have now agreed to a simpler transaction involving just the mobile business as a first step. An executive directly familiar with the discussions said the talks resumed in earnest on Friday and the deal was stitched over the weekend. Goldman Sachs was the adviser to the transaction.Tata’s wireless operations will continue as usual until the completion of the deal, which will also see Bharti Airtel getting the right to use part of the existing fibre backbone network of Tata Teleservices. Besides, the Tatas will retain their stake in tower company Viom Networks, and will take care of the liabilities associated with it, the two companies said.Shares of Tata Teleservices (Maharashtra) – the listed unit of Tele Teleservices which provides services in the Mumbai and Maharashtra circles — surged 9.95% to close at Rs 4.42 on the BSE, while Bharti Airtel’s scrip ended at Rs 400.05, down 0.83% on Thursday. Tata Communications ended the day 2.1% higher at Rs 687.60. The BSE Sensex was up 1.09%. The deal announcement was made after market hours.The Tatas on Thursday also said they were in initial stages of exploring combination of Tata Teleservices’ enterprise business with Tata Communications and its retail fixedline and broadband business with Tata Sky. “Any such transaction will be subject to respective board and other requisite approvals,” the company said.The employees of Tata Teleservices are being separated on the lines of the two businesses — consumer on one side and enterprise & fixedline and broadband on the other.For the 53-year-old Chandrasekaran, the deal with Bharti marks the second significant restructuring of the group portfolio since he assumed office earlier this year. Last month, Tata Steel and German steelmaker Thyssenkrupp AG, agreed to merge their European businesses to become the second-largest steelmaker of the continent.“As soon as I came in, I looked at the portfolio and made a list that included Tata Teleservices, delinking European and the India business of Tata Steel, and commercial vehicles and passenger cars of Tata Motors,” he told ET a few days earlier.Tata Teleservices has been facing immense financial pressure over the years amid ever-increasing competition. Its call to enter mobility in 2002 through CDMA technology didn’t succeed and by the time it adopted GSM in 2008 – and got NTT Docomo to invest around Rs 14,000 crore for a 26% stake — it had already fallen well behind the likes of Airtel, Vodafone and Idea. A brutal price war after the entry of new operators in 2008-09 meant the company continued to post losses while debt continued to mount, leading to Docomo’s eventual decision to exit in 2014. With the Tatas unable to find a buyer for its mobile business, the entry of Reliance Jio in September 2016 — which led to a dramatic industry disruption as data and voice rates tanked — was the proverbial last nail in the coffin, leaving the group with no option but shut it or sell it at any cost.Brokerage house UBS said it expected the deal to be EBITDA accretive for Bharti Airtel from the start.“As per the disclosures of Tata Group, the business was EBITDA positive and after adjusting for possible cost-outs after the acquisition, we believe it will likely be EBITDA accretive for Airtel from the start,” it said.