Bharti Airtel on Thursday announced acquisition of Telenor India by taking over its spectrum liability and tower contracts amid fierce competition from a formidable newcomer Reliance Jio, but the telecom giant stopped short of taking over Telenor India’s debt of about Rs 1,500 crore on its books.
The proposed deal with Airtel would provide an exit to Norwegian telecom firm’s Indian arm Telenor India and strengthen Bharti against competition, besides consolidating the domestic telecom sector moving forward.
Bharti Airtel today has entered into a definitive agreement with Telenor South Asia Investments to acquire Telenor (India) Communications. 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.
Entry of Reliance Jio in September 2016 and its free promotional offers have forced the industry to work towards consolidation. Some experts feel that consolidation is the only answer to battle a newcomer like Reliance Jio.
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.
These circles represent a high population concentration and therefore offer a high potential for growth, the company said in a statement.
The acquisition is subject to requisite regulatory approvals. The proposed acquisition will include transfer of all of Telenor India’s assets and customers.
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.
Telenor India’s operations and services will continue as normal until the completion of the transaction.
Gopal Vittal, Managing Director and CEO (India and South Asia), Bharti Airtel, said, “On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side, and further strengthen our market position in several key circles.”
“The proposed transaction will also create substantial long term value for our shareholders given the significant synergies.” added Gopal.
Sigve Brekke, Chief Executive Officer of 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.”