New Delhi: India’s largest telco Bharti Airtel Ltd on Thursday said it has entered a definitive agreement with Telenor South Asia Investments Pte Ltd to acquire Telenor Communications Pvt. Ltd (Telenor India).
The acquisition is subject to requisite regulatory approvals. The valuation of the deal was not disclosed.
The acquisition comes as a shot in the arm for the New Delhi-based company, whose dominance in the Indian market is under threat from multiple corners. While Reliance Jio Infocomm Ltd’s free services have eroded its profitability, the number two and number three telecom service providers, Vodafone India Ltd and Idea Cellular Ltd, have entered merger talks to create India’s largest telecom company, threatening to put an end to Airtel’s nearly 20-year-old dominance over the industry.
“The proposed acquisition will include transfer of all of Telenor India’s assets and customers, further augmenting Airtel’s overall customer base and network. It will also enable Airtel to further bolster its strong spectrum footprint in these seven circles, with the addition of 43.4 MHz spectrum in the 1800 MHz band,” the company said in a statement.
As part of the agreement, Airtel will acquire Telenor India’s running operations in seven circles—Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East), Uttar Pradesh (West) and Assam. These circles represent a high population concentration and, therefore, offer a high potential for growth.
Gopal Vittal, managing director and chief executive officer (India and South Asia), Bharti Airtel, said that the acquisition is meant to offer world-class and affordable telecom services through a robust spectrum portfolio spread across multiple bands—something which Jio has also tried to do.
“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 customers of Telenor India will now be able to enjoy India’s widest and fastest voice & data network, and a range of Airtel’s world-class products and services,” Vittal said.
Sigve Brekke, chief executive of Telenor Group, 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,” Brekke said.
In intraday trading, Bharti Airtel Ltd gained as much as 11%, to touch an over 18-month high of Rs 400.65 a share—a level last seen on 13 August 2015.
At 10.17am, Bharti Airtel Ltd was trading at Rs 379 on BSE—up 5% from its previous close on Wednesday—while India’s benchmark Sensex Index rose 0.25% to 28,938 points.