Bharti Airtel Acquires Telenor India to take on Reliance Jio & Vodafone-Idea!
Reliance Jio is dominating the telco industry right now, with over 100 million subscribers in less than 170 days, and Vodafone-Idea merger is going to take place soon. This means Airtel has to buckle up to take these giants head-on.
Today, Bharti Airtel has entered into a definitive agreement to buy Telenor’s operations in India. Airtel has over 269 million subscribers in the country, in all of its circles, and a 33% market share which is threatened by Jio and Vodafone-Idea merger.
Telenor India operates in primarily six circles – Andhra Pradesh, Bihar & Jharkhand, Gujarat, Maharashtra, UP East and UP West, and the company also has spectrum in Assam. Telenor announced entry in India in 2008, and as of 2016, it has a revenue of Rs. 4,801 crores.
As of November 2016, Telenor India had a total subscriber base of 53.75 million subscribers. The merged entity is expected to have over 315 million subscribers.
Gopal Vittal, Managing Director and CEO (India and South Asia), Bharti Airtel, says, “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 proposed acquisition will undergo seamless integration, both on the customer as well as the network side, and further strengthen our market position considerably in several key circles.”
Airtel and Telenor India will merge and Airtel will take over Telenor India as soon as all necessary approvals are received. As part of the agreement, Airtel will take over outstanding spectrum payments and other operational contracts, including tower lease, provided they get approvals from the Department of Telecommunications in India (DoT) and the Competition Commission of India.
The whole merger/transaction is expected to close within the next 12 months. With effect from first quarter 2017, Telenor India will be treated as an asset held for sale and discontinued operations in Telenor Group’s financial reporting.
Will the merger be able to withstand the competitors?
Airtel India has been looking to acquire Telenor to strengthen its operations in six other circles where it doesn’t have much strength. Additionally, it will expose Airtel to 43.4 MHz spectrum in the 1,800 MHz band.
A Vodafone-Idea merger will be a big thing for Airtel, as it will decrease the market share of the company. With Telenor India’s assets in seven circles, Airtel hopes to get back with a larger customer base and a better frequency band.
Telenor’s operations in India will continue as normal until Airtel fully acquires it, post that the subscribers will be shifted to Bharti Airtel’s network. It looks like in the end, there will be three large players – Reliance Jio, Bharti Airtel and Vodafone-Idea combined entity.