Press Release (ePRNews.com) - PUNE, India - Feb 24, 2017 - Telenor wrapped up its ill-starred India venture by agreeing to sell the business to market leader Bharti AirtelBSE 1.36 %, which will take on some of the Norwegian telecom giant’s local liabilities in return. The acquisition, which comes amid market consolidation, will boost Bharti’s 4G airwaves and revenue market share, strengthening its hand in the battle against Reliance Jio Infocomm.
The move marks the end of Telenor’s bid to gain a share of the world’s biggest telecom market after China. The exercise saw the company forming a partnership that was embroiled in one of India’s most high-profile corruption scandals and having all its licences scrapped by the Supreme Court as a result. Under pressure from competition, the parent was forced to mark down the value of its local unit by 6.3 billion krone (Rs 5,000 crore/$760 million) last year.
Bharti will take over outstanding spectrum payments worth around Rs 1,650 crore and other operational contracts, including tower leases with Bharti Infratel and Indus Towers, besides employees and 44 million customers, taking India’s biggest phone company to 300 million subscribers.
“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 would not have given an acceptable level of return,” Telenor Group’s global CEO Sigve Brekke said in a joint statement on Thursday.
ET was the first to report on talks between Telenor and Bharti on January 3.
The companies said the deal is expected to close in 12 months. The India unit will be treated as an asset held for “sale and discontinued operations” in Telenor Group’s financial reporting from the first quarter of 2017.
Telenor has operations in the six telecom circles — Andhra Pradesh, Bihar & Jharkhand, Gujarat, Maharashtra, Uttar Pradesh (East) and UP (West). It also has spectrum in Assam where it hasn’t started operations. These seven circles contribute about 35% to Airtel’s total revenue.
“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,” said Gopal Vittal, managing director, India and South Asia, Bharti AirtelBSE 1.36 %.
Bharti Airtel’s stock surged to a 52-week high on the BSE on the news, before ending at Rs 366.05, up 1.4%, on Thursday.
Telenor’s exit reflects the underlying trend of consolidation in the India telecom market that has been spurred by the free voice and data services offered by Mukesh Ambani-controlled Jio. Anticipating tougher times with Jio’s entry, fringe players like Videocon have exited while larger ones such as Idea Cellular and Vodafone India, and Reliance CommunicationsBSE 3.22 %, Aircel, and MTS are in consolidation mode.
Telenor though has had a rough ride ever since it started operations in late 2009 in partnership with real estate company Unitech under the Uninor brand. Although it won licences to offer nationwide services, all of them were cancelled in the judgement on the so-called 2G scam in 2012. The company fell out with its partner, which soon had troubles of its own, but decided to persevere in the world’s second-biggest market, taking sole ownership of the unit in 2014, after the rules were changed in 2013 to allow this.
Having bought back spectrum in separate auctions in seven circles, the renamed Telenor India played the price card, offering services at almost half that of its bigger rivals to gain subscribers, even becoming EBITDA positive on the back of cost efficiencies.
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