Mumbai, Feb 24 : In yet another merger in the country’s telecoms sector, India’s top telecoms network, Bharti Airtel is buying Norwegian Telenor’s India unit. Bharti Airtel said that it will buy Telenor (India) Communications Pvt Ltd, as part of which it will acquire the Norwegian company's operations in six Indian states.
A Telenor spokesman said Bharti will not pay any cash under the deal but will instead take on the Telenor unit’s commitments to pay for licenses and phone towers. The acquisition, which also includes Telenor’s India employees and its 44 million customers, will not lead to any impairment charges for Telenor.
The deal highlights how the entry late last year of Reliance Industries' wireless carrier Jio is shaking up India's crowded telecoms sector. With its free voice and deeply discounted data plans, Jio has pushed rivals to slash rates, sharply eroding their profits.
Britain's Vodafone Group is already in talks to merge its Indian subsidiary with Idea Cellular, potentially overtaking Bharti Airtel as India’s largest mobile operator with about $12 billion in sales.
"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, Sigve Brekke, CEO of Telenor Group, said in a statement.
Shares of Bharti Airtel, in which Singapore Telecommunications is the second-biggest shareholder, rose as much as 11 percent in Mumbai trade to a one-and-a-half year high after the deal was announced. They were up 4.7 percent in early afternoon trade.
Jio, backed by energy conglomerate Reliance Industries' billionaire owner Mukesh Ambani, has intensified competition in India, the world's second-biggest mobile market after China.
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. Some of that competition could ease after Ambani said on Tuesday Jio would start charging customers starting in April after accumulating more than 100 million subscribers since its launch.
Jio and Bharti would potentially compete against a merged Vodafone-Idea entity with 375 million subscribers, forcing remaining smaller players such as debt-ridden Tata Teleservices into urgently finding a buyer. Another small carrier, Videocon Telecom, is in the process of shutting its wireless business.