The ratio of share issue indicates that the consumer mobile business of Tata Telservices Maharashtra Ltd accounts for only 3.77% of the equity value of Tata Telservices Maharashtra.
In other words, the consumer mobile division — which is being demerged to Bharti Airtel — accounts for only 27 paise out of the total share value of Rs 7.05 per share for Tata Teleservices Maharashtra.
As a result, the value of 2,014 such shares comes to Rs 535, the current value of one share of Bharti Airtel.
The new shares in Bharti Airtel will be issued to TTML shareholders without the need for the latter to tender their existing shares.
In other words, TTML shareholders will continue to hold shares in the Tata company, even as they get new shares in Bharti Airtel.
Though the demerged division accounts for only 3.77% of the equity value of Tata Tele Maharashtra, it accounts for 57% of its revenue, according to company figures.
Tata Tele said it would be able to run its remaining business better once the consumer division is moved to Airtel.
“Under the transferor company (TTML), the consumer mobile business has been loss-making for some years now,” it said.
“The demerger allows the transferor company to reduce its substantial debt-servicing and other expenses associated with the consumer mobile business,” it said.
The TTML stock price has not changed much despite the announcement of sale of the consumer unit.
It was trading in the Rs 7 range in August and September, and continues to trade at that range. The low valuation ascribed to the consumer business indicates that the shares are unlikely to lose much in terms of market value when the consumer mobile business is handed over.