Bharti Airtel, India’s largest telecom service provider, is acquiring Norwegian telecom operator Telenor’s India operations to hold onto its number one position in terms of revenue as well as subscriber space in the market. The acquisition comes in the wake of less than six months old Reliance Jio crossing the 100 million mark of subscriber base by offering unlimited voice calls and 30 GB data per month during its trial period. The telecom sector is witnessing consolidation and larger players are trying to hold on to their position in the market by making aggressive acquisitions.
Here are 10 things to know:
1) Telenor India has operations in seven circles – Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. These regions are densely populated and offer scope for future growth in the 4G market.
2) The acquisition will boost Bharti Airtel’s spectrum footprint with the addition of 43.4 MHz spectrum in the 1800 MHz band.
3) A Telenor spokesman told Reuters that Bharti Airtel will not pay any cash under the deal but will instead take on the Telenor unit’s commitments to pay for licences and phone towers.
4) “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,” Telenor Group CEO Sigve Brekke said in a statement.
5) In November 2016, Airtel had acquired 4G airwaves of Aircel in all the eight telecom circles under a Rs. 3,500-crore spectrum trading deal.
6) Britain’s Vodafone Group said last month it was in talks to merge its Indian subsidiary with Idea Cellular to create India’s largest mobile operator with about $12 billion in sales.
7) Anil Ambani-owned Reliance Communications too has entered into an agreement to merge its wireless business with rival Aircel.
8) Mukesh Ambani-owned Reliance Jio’s entry in the market has forced telecom companies to offer promotional offers which are eating into their margins. Bharti Airtel reported its lowest profit in four years in the October-December quarter while No. 3 player Idea Cellular posted its first-ever quarterly loss for the same period.
9) The acquisition will result in additional burden for Bharti Airtel. The company’s debt is likely to go up by Rs. 8,000 crore, including restructuring costs of an estimated Rs. 1,000 crore, according to Edelweiss.
10) The news of acquisition by Airtel boosted its stock price. Bharti Airtel shares surged as much as 11 per cent to touch a fresh 52-week high of Rs. 400.65 on Thursday.