Jio effect: Airtel to acquire Telenor India operations
Girja Shankar Kaura
Tribune News Service
New Delhi, February 23
Country’s largest telecom operator Airtel today announced the acquisition of Telenor India by taking over its spectrum liability and tower contracts as the competition unleashed by a formidable newcomer, Reliance Jio, is forcing telecom companies to rethink their strategy and look for mergers and acquisitions.
However, the telecom giant stopped short of taking over Telenor India’s debt of around Rs 1,500 crore on its books. The acquisition is subject to requisite regulatory approvals.
The proposed deal would provide an exit route to the Norwegian telecom firm’s Indian arm and strengthen Airtel in the face of stiff competition and help it consolidate its domestic standing moving forward.
The acquisition of Telenor by Bharti is expected to bolster Airtel’s already strong footprint with additional spectrum in 1,800 MHz band.
This is the second such announcement in the sector after Vodafone and Idea Cellular confirmed their discussions for a proposed merger late last month following the aggressive strategy launched by Jio.
Entry of Reliance Jio in September 2016 and its free promotional offers has forced the industry to work towards consolidation.
As part of the agreement, Airtel will acquire Telenor India’s running operations in seven circles — Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam.
According to latest data, Telenor had a market share of 3.9% as of December 2016 with 38 million subscribers as of December-end. Airtel, on the other hand, is the market leader with 26.1% market share and a subscriber base of 258 million (25.8 crore).
“The acquisition of additional spectrum through this transaction, which made an attractive business proposition, has further enhanced our already solid spectrum portfolio,” said Gopal Vittal, Managing Director and CEO (India and South Asia), Bharti Airtel.
Airtel has said it will offer the existing customers of Telenor India added benefits of its innovative product portfolio, access to superior voice and data services, mobile banking, domestic and international roaming facilities.
Sigve Brekke, CEO, Telenor Group, said: “Finding a long-term solution to our India business has been a priority for us, and we are pleased with our agreement with Airtel. After thorough consideration, it is our view that the significant investments needed to secure Telenor India’s future business on a standalone basis will not give an acceptable level of return.”
