Airtel acquires Telenor's India operations
- Author: Arturo Norris Feb 24, 2017,
Feb 24, 2017, 10:30
A unit of the large Reliance Industries with deep pockets, Jio upset the plans of entrenched rivals by offering 4G services free for close to six months, garnering 100 million customers in the bargain.
Telenor is subjected to have a customer base of 44 million along with other assets such as employees, operations, licenses, spectrum and customer base, which will now come under Airtel. Telenor India now operates in seven circles - Andhra Pradesh, Assam, Bihar, Gujarat, Maharashtra, Uttar Pradesh (East) and Uttar Pradesh (West). Airtel now has 269.40 million subscribers across India.
Airtel is planning to strengthen its spectrum footprint in all the circles of Telenor India through adding 43.4MHz in the 1800MHz band.
Bharti will also take over the tower lease agreements, network and IT infrastructure of Telenor along with taking over its 700-800 regular employees.
Telenor said the decision to exit India was "not taken lightly", but was seen as necessary in view of the hard business case here.
Telenor's exit comes amid unprecedented disruption in the telecom sector with Reliance Jio's power play causing a situation of possible big mergers in the industry.
Fitch Ratings expects Bharti Airtel's EBITDA for the financial year to March 2017 to be around $5 billion - $5.3 billion against $5 billion in FY 2016 despite intense competition in the Indian mobile market during H2 FY 17 (excluding Telenor's operations). "After thorough consideration, it is our view that the significant investments needed to secure Telenor India's future business on a standalone basis would not have given an acceptable level of return", Brekke added. At the same time we take with us the positive things we have learned in India.
Airtel will completely take over the company and the acquisition will be completed within 12 months, both the companies said in a statement.
It is also expected that with Idea-Voda merger, Airtel will lose its number one position in the industry and buying Telenor will not change that as the Idea-Voda merged entity stands to become India's largest telecom company with revenues of over Rs. 80,000 crore.
Till now, Bharti Airtel did not disclose the financials of the Telenor India acquisition in its filing with BSE (Bombay Stock Exchange). Bharti Airtel surged as much as 11 per cent to touch a fresh 52-week high of Rs 400.65.
"The other operators were prepared for a more gradual ramp-up strategy of their own, but now, with Jio, they need to expand more urgently", Kolla, at Convergence Catalyst, said. The agreements were made "according to common industrial practice in Thailand, but were not in line with Telenor's internal guidelines", the company said.