New Delhi: India’s largest mobile operator Bharti Airtel will acquire Telenor’s India unit as telecom sector sees fresh wave of consolidation due to heightened competition. The announcement comes at a time when Vodafone and Idea cellular are already in talks to merge to create India’s biggest telecom firm. The entry of aggressive Reliance Jio with its free calling offer has toughened the market conditions leading to consolidation in the sector and small operators looking to exit.
Telenor Group CEO Sigve Brekke said that the decision to exit India has not been taken lightly. “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,” he said. “We believe today’s agreement is in the best interest of our customers, employees and Telenor Group. Finding a long term solution to our India business has been a priority for us, and we are pleased with our agreement with Airtel,” added Mr Brekke.
Telenor entered the Indian market in 2008. Airtel will not make any cash payment for Telenor’s India unit but will take on Rs 1,600 crore future liability towards spectrum licence fee and mobile tower rentals. Telenor’s Indian unit has 45 million subscribers who generate revenue of $600-700 million. Airtel has a subscriber base of 266 million and this acquisition will help it to increase its revenue market share by 2 per cent to around 35 per cent.
As part of the agreement, Airtel will acquire Telenor India’s running operations in 7 circles — AP, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. Airtel said that these circles represent a high population concentration and offer a high potential for growth. Telenor India’s operations and services will continue as normal until the completion of the transaction. The proposed acquisition will include transfer of all of Telenor India’s assets and customers. It will enable Airtel to further bolster its spectrum foot-print in these seven circles, with the addition of 43.4 MHz spectrum in the 1800 MHz band.