India’s largest telecom services company Bharti Airtel’s move for a cash-free debt-free acquisition of Tata Teleservices, the telecom arm of salt-to-software-conglomerate Tata Group, is a win-win deal for both.

Airtel has acquired Tata Teleservices for free and it only needs to pay roughly Rs 15-20 billion of the Rs 100 billion (US$ 1.54 billion) airwaves auction payments that Tata Teleservices needs to make to the government over the next few years.

For Airtel, it means getting over 71 MHz of liberalized spectrum and 40 million customers spread across 19 circles at a throwaway price. It will now have a subscriber base of around 321 million. This is Airtel’s  second virtually free acquisition. Earlier this year, it took over Norwegian company Telenor’s India operation in a similar manner.

For Tata Group, the deal is a face-saver as it won’t have to shut down its telecom unit. In its 149-year-old history, the Tatas have never shut down any major unit. Its 5,000 employees may not face imminent job loss but it remains to be seen how many of them will be absorbed.

Though Tatas will have to deal with its telecom unit’s accumulated debt at over Rs 340 billion (US$ 5.24 billion), it can get rid of a perpetually bleeding unit from its account book.

Tata group CFO Saurabh Agrawal told Business Standard, “We had to either invest US $8-10 billion or exit the business. From capital allocation perspective, we thought that we had lost that position where we could make further investments.”

He added, “Currently, we will take additional debt within Tata Sons and take care of all liabilities and then we will refinance it in some form and shape.”