Telenor is exiting the Indian market and selling its operations to market leader Bharti Airtel. As the new owner, Airtel will take over Telenor India’s spectrum, licenses and operations, including its employees and customer base of 44 million. Telenor’s operations and services will continue as normal until the completion of the transaction, Telenor said. No financial details related to the acquisition have been disclosed.
According to Gopal Vittal, managing director and CEO (India and South Asia) of Bharti Airtel, on completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side, and strengthen Airtel’s market position "considerably" in several key circles. Airtel is already the biggest mobile operator in India with over 269 million subscribers and a revenue market share of over 33 percent. Its two closest competitors, Vodafone India and Idea Cellular, are already considering a merger.
Telenor said the transaction will not trigger any impairment, as it has already written off much of the value of the Indian operations. As of fourth quarter 2016, the remaining value of tangible and intangible assets in Telenor India amounted to NOK 0.3 billion.
Under the terms of the agreement, Airtel and Telenor India will merge and Airtel will take over Telenor India as soon as all necessary approvals are received. Airtel will take over outstanding spectrum payments and other operational contracts, including tower leases.
The transaction is subject to approvals from the Department of Telecommunications in India (DoT) and the Competition Commission of India. Pending these approvals, the deal is expected to close within 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.
Telenor entered the Indian market in 2008. In 2016, Telenor India reported revenues of NOK 6 billion and the operating cash flow was a negative NOK 0.4 billion. The company has narrowed its focus in recent years to six telecom circles in India (Andhra Pradesh, Bihar & Jharkhand, Gujarat, Maharashtra, UP East and UP West), and Telenor India also has spectrum in Assam.
Last year Telenor decided not to participate in the latest spectrum auction in India, saying it could not justify the investment cost, and since then multiple reports have circulated of the company considering various combinations with other mobile operators. The entry of the new player Reliance Jio, which amassed over 100 million customers in less than six months, appears to have been the final straw for Telenor, prompting the decision to withdraw from the highly competitive Indian market. The Norwegian company remains active in the region with successful operations in Bangladesh (Grameenphone) and Pakistan.
