Reliance Jio Effect: Airtel buys Telenor ahead of Voda-Idea deal

Chaitanya GudipatyMoneycontrol News

In yet another move indicating a consolidation in the telecom industry, India’s largest telecom operator Bharti Airtel informed the bourses on Thursday that it will acquire Telenor India assets. The exit of the Norwegian telecom company's from India comes at a time when new entrant Reliance Jio has acquired 100 million users and the market is awaiting response on a potential Vodafone-Idea merger.In a regulatory filing to the Bombay Stock Exchange, Airtel said it has entered into a "definitive agreement" to Telenor's Indian assets. The acquisition is also subject to regulatory approvals.“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. On completion, the 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,” Gopal Vittal, Managing Director and Chief Executive ( India and South Asia), Bharti Airtel, said in the filing.(Bharti Enterprises Chairman Sunil Bharti Mittal with Telenor CEO Sigve Brekke. Source: Company photo)The Telenor acquisition will give Bharti Airtel additional spectrum in 1,800 MHz band besides a foothold in seven circles — Andhra Pradesh, Assam, Bihar, Gujarat, Uttar Pradesh (East and West) and Maharashtra — where Telenor operates in.  The buyout gives Airtel additional access to 43.4 Mhz spectrum in the 1800 MHz band.“The proposed transaction will also create substantial long-term value for our shareholders given the significant synergies,” Vittal said in the filing.

In terms of subscribers, Airtel gets 52.5 million users from Telenor kitty. Currently, Airtel has 269.40 million subscribers across India.Meanwhile, Telenor Group CEO Sigve Brekke said, “We believe today’s agreement is in the best interests 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. After thorough consideration, it is our view that significant investments needed to secure Telenor India’s future business on a standalone basis will not give an acceptable level of return.”Vodafone-Idea Cellular Merger TalksThe telecom industry is abuzz with consolidation activity since the arrival of Reliance Jio last September. Currently, Vodafone India and Idea Cellular are in talks for merging their telecom businesses.

Vodafone Plc, had on January 30, had said that it is in exploratory discussions with the Aditya Birla Group's telecom arm Idea Cellular for a merger. If the merger talks go through, the merged entity stands to become India’s largest telecom company with revenues of over Rs 80,000 crore.Also Read: Vodafone confirms merger talks with Idea CellularThe combined entity would have 43 percent revenue market share and have a 40 percent active subscriber market share, according to brokerage firm CLSA. The merged entity would account for over 25% of allocated spectrum and will have to sell about 1 percent to comply with spectrum cap norms, CLSA said.