Sunil Mittal, the promoter of Bharti Airtel, does not want to give up to – Mukesh Ambani’s Reliance Jio — in the Indian telecom market.
Bharti Airtel today announced its deal to acquire Telenor India. Telenor India has nearly 44 million mobile customers – mainly in rural areas. Bharti Airtel has 270 million mobile users in India. Earlier, Telenor was in discussion with Vodafone India for a deal. Vodafone Group is now trying to court Idea Cellular for merging its India business.
Earlier, Bharti Airtel acquired the spectrum of Videocon Telecom. The latest acquisition strongly indicates the consolidation in the Indian telecom market. Recently, media reports suggested that Tata Teleservices will be merged with Reliance Communications-Aircel-MTS combine.
With the latest move, India is likely to have 4 big telecom operators: Airtel, Idea-Vodafone, RCOM-Aircel-MTS-TTSL, Reliance Jio and the state-run BSNL-MTNL.
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Telenor exits India
Telenor Group, which entered the Indian telecom market in 2008 with cost effective mobile calls, has operations in seven telecom circles – Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam.
The acquisition of Telenor India’s assets and customers will enable Airtel to further bolster its strong spectrum foot-print in these seven circles, with the addition of 43.4 MHz spectrum in the 1800 MHz band.
“The agreement underlines our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust spectrum portfolio spread across multiple bands,” said Gopal Vittal, managing director and CEO (India and South Asia), Bharti Airtel.
Telenor Group CEO Sigve Brekke said: “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.”
Telenor deal details
The proposed Airtel-Telenor combined entity will enable Airtel to celebrate its 300 million mark in India. Recently, Reliance Jio announced its 100 million subscribers.
If Idea and Vodafone combine their telecom operations, they will lead the Indian mobile services market with around 400 mobile users. Vodafone India has 206.44 million subscribers and Idea Cellular has 192.06 million mobile subscribers, according to COAI.
Airtel, which has over 269 million subscribers and a revenue market share of over 33 percent, is under pressure due to the free services from Reliance Jio.
In 2016, Telenor India’s revenues were NOK 6.0 billion and the operating cash flow was NOK -0.4 billion.
As of fourth quarter 2016, the remaining value of tangible and intangible assets in Telenor India amounted to NOK 0.3 billion.
Telenor said the deal is subject to approvals from the Department of Telecommunications in India (DoT) and the Competition Commission of India. The deal is expected to close within 12 months.
Telenor has presence in Pakistan, Myanmar and Bangladesh.
Image: Sunil Bharti Mittal, founder and chairman of Bharti Enterprises with Sigve Brekke, chief executive officer of Telenor Group post announcement of Airtel’s acquisition of Telenor (India) in New Delhi today