Bharti Airtel to buy out Telenor India

New Delhi/Mumbai, Feb 23 (IANS) India's largest telecom service provider Bharti Airtel on Thursday announced that it has inked a definitive agreement to acquire Telenor India.

According to the telecom major, it has entered into a definitive agreement with Telenor South Asia Investments to acquire Telenor (India) Communications Private Limited. The acquisition is subject to requisite regulatory approvals.

However, the company did not divulge the cost of the acquisition.

The agreement entails that Airtel will acquire Telenor India's running operations in seven circles of Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East), Uttar Pradesh (West) and Assam, Bharti Airtel added.

"The proposed acquisition will include transfer of all of Telenor India's assets and customers, further augmenting Airtel's overall customer base and network," the telecom giant said in a statement.

"It will also enable Airtel to further bolster its strong spectrum foot-print in these seven circles, with the addition of 43.4 MHz spectrum in the 1800 MHz band."

Airtel said that it will ensure quality services to Telenor India's customers, while offering them the added benefits of its innovative product portfolio, access to superior voice and data services, mobile banking, VAS (value added services) and domestic/international roaming facilities.

Telenor India's operations and services would continue as normal until the completion of the transaction.

"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," Gopal Vittal, Managing Director and CEO (India and South Asia), Bharti Airtel, was quoted as saying in the statement.

"The customers of Telenor India will now be able to enjoy India's widest and fastest voice and data network, and a range of Airtel's world-class products and services."

Vittal elaborated that acquisition of additional spectrum will further enhance the company's already solid spectrum portfolio.

"The proposed transaction will also create substantial long term value for our shareholders given the significant synergies," Vittal added.

Currently, the Airtel has operations in 17 countries across Asia and Africa. It had over 368 million customers across its operations at the end of January 2017.

As the new owner, Airtel will take over Telenor India's spectrum, licenses and operations, including its employees and customer base of 44 million.

On Thursday, Airtel's scrip on the BSE gained 1.36 per cent or Rs 4.90 to Rs 366.05 per equity share from its previous close of Rs 361.15.

"Finding a long-term solution to our India business has been a priority for us, and we are pleased with our agreement with Airtel," said Sigve Brekke, Chief Executive Officer of Telenor Group, in a separate statement.

"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."

The transaction is subject to requisite regulatory approvals, including from the Department of Telecommunications (DoT) and the Competition Commission of India (CCI).

Besides, the Telenor said that it expects to close the deal 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," the Telenor statement said.

Ratings agency Fitch Ratings said that the agreement by Bharti Airtel to buy Telenor India is the latest sign that entry of aggressive new operator Reliance Jio has spurred the incumbents to consolidate to meet the intense competition.

"Bharti's credit profile will remain unaffected by the planned acquisition as the benefits from additional spectrum assets will offset the spectrum liabilities taken over," Fitch Ratings said.

"We retain our negative outlook on the sector for 2017, as fierce competition and rising capex (capital expenditure) will put pressure on most operators in the short term."

The ratings agency said that Jio's massive investment of $20-25 billion and unprecedented offering of free voice and data for six months to new subscribers have accelerated industry consolidation.

"The on-going consolidation is likely to leave four larger operators - Bharti, Jio, the combination of Vodafone India and Idea Cellular, and the combined Reliance Communications and Aircel," Fitch Ratings added.

(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)