Airtel To Buy Telenor India As Norwegian Telecom Operator Exits

Norwegian telecom operator Telenor is on its way to exit India by selling its operations to Bharti Airtel. India's biggest telecom operator Bharti Airtel on Thursday announced an agreement to acquire Telenor India, which has operations in seven circles - Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. The financial details of the deal were not disclosed. Bharti Airtel said that the acquisition will boost its spectrum footprint with the addition of 43.4 MHz spectrum in the 1800 MHz band. Nitin Soni, director for Asian Corporates at Fitch Ratings, said the Telenor deal will boost Airtel’s 4G footprint, which is very much essential to compete with Reliance Jio. The deal is subject to clearance from regulatory agencies.

Telenor had around 5 crore subscribers in India as on December 31, according to data from telecom regulator TRAI (Telecom Regulatory Authority of India).

Gaurang Shah of Geojit BNP Paribas said that the aggressive competition brought on by Reliance Jio has taken a big toll on smaller players. "We see a consolidation in the sector and there could be just 3-4 large players in the market."

Sigve Brekke, CEO of Telenor Group, 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. The decision to exit India has not been taken lightly."

The significant investments needed to secure Telenor India's future business on a standalone basis will not give an acceptable level of return, he added.

Gopal Vittal, managing director and CEO (India and South Asia) at Bharti Airtel, in a statement said: "The acquisition of additional spectrum through this transaction, which made an attractive business proposition, has further enhanced our already solid spectrum portfolio. The proposed transaction will also create substantial long term value for our shareholders given the significant synergies."

The Street cheered the Telenor deal, sending Bharti Airtel shares nearly 8 per cent higher. Shares of another telecom operator Idea Cellular, which has disclosed that it is in a discussion with Vodafone India for a merger, also soared over 5 per cent.

Reliance Jio, which launched operations in September, has amassed 100 million customers in just 170 days of its launch through free data and voice offers. Though Jio will charge customers from April, analysts see the price war continuing in the telecom sector.

Jio's voice call is free and its data price plans are very aggressive, which will continue to extract a big toll on the sector, said Siddharth Sedani, vice president for advisory at Anand Rathi.

Norwegian telecom operator Telenor is on its way to exit India by selling its operations to Bharti Airtel. India's biggest telecom operator Bharti Airtel on Thursday announced an agreement to acquire Telenor India, which has operations in seven circles - Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. The financial details of the deal were not disclosed. Bharti Airtel said that the acquisition will boost its spectrum footprint with the addition of 43.4 MHz spectrum in the 1800 MHz band. Nitin Soni, director for Asian Corporates at Fitch Ratings, said the Telenor deal will boost Airtel’s 4G footprint, which is very much essential to compete with Reliance Jio. The deal is subject to clearance from regulatory agencies.

Telenor had around 5 crore subscribers in India as on December 31, according to data from telecom regulator TRAI (Telecom Regulatory Authority of India).

Gaurang Shah of Geojit BNP Paribas said that the aggressive competition brought on by Reliance Jio has taken a big toll on smaller players. "We see a consolidation in the sector and there could be just 3-4 large players in the market."

Sigve Brekke, CEO of Telenor Group, 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. The decision to exit India has not been taken lightly."

The significant investments needed to secure Telenor India's future business on a standalone basis will not give an acceptable level of return, he added.

Gopal Vittal, managing director and CEO (India and South Asia) at Bharti Airtel, in a statement said: "The acquisition of additional spectrum through this transaction, which made an attractive business proposition, has further enhanced our already solid spectrum portfolio. The proposed transaction will also create substantial long term value for our shareholders given the significant synergies."

The Street cheered the Telenor deal, sending Bharti Airtel shares nearly 8 per cent higher. Shares of another telecom operator Idea Cellular, which has disclosed that it is in a discussion with Vodafone India for a merger, also soared over 5 per cent.

Reliance Jio, which launched operations in September, has amassed 100 million customers in just 170 days of its launch through free data and voice offers. Though Jio will charge customers from April, analysts see the price war continuing in the telecom sector.

Jio's voice call is free and its data price plans are very aggressive, which will continue to extract a big toll on the sector, said Siddharth Sedani, vice president for advisory at Anand Rathi.