Telenor sells Indian operations to Bharti Airtel
Bharti Airtel is to buy Telenor India from its Norwegian owner for an undisclosed price, giving the combined company a total of 311 million subscribers in the country.
The two companies announced the move, which is expected to take up to a year to complete, early this morning. Airtel is already the largest operator in India.
Telenor downplayed the impact of the sale on its results, saying that “the remaining value of tangible and intangible assets in Telenor India” amounted to only $36 million. Revenues last year were $710 million, and the operating cash flow was minus $47 million.
The Norwegian company has only 44 million customers in India, compared with Airtel’s 269 million.
In January it was revealed that Telenor owes nearly $280 million to the Indian government in spectrum fees and nearly $270 million in debt to financial institutions for the business. Telenor did not take part in India’s October 2016 spectrum auctions, a move widely believed to have signalled its intention to leave the country.
Under the terms of the merger, Airtel will take over outstanding spectrum payments and other operational contracts, including tower leases. That implies that Airtel may be paying only a token price for the Telenor India business.
Telenor CEO Sigve Brekke said: “Finding a long term solution to our India business has been a priority for us, and we are pleased with our agreement with Airtel. 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.”
The proposed merger is the latest in a series of deals that will see consolidation in the highly competitive Indian mobile industry, a market thrown into even more turmoil last year thanks to the entry of 4G operator Reliance Jio. In January Vodafone said it was in talks with Idea Cellular, and last year Aircel and Reliance Communications – usually known as RCom and unrelated to Reliance Jio – said they were merging.
Gopal Vittal, who runs Airtel’s operations in India and South Asia, said: “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. The customers of Telenor India will be able to enjoy India's widest and fastest voice and data network, and a range of Airtel's world-class products and services.”
Telenor has been in India since 2008, but the experience has rarely been happy. It was originally set up under the Uninor brand as a joint venture with a local real-estate company, and Telenor paid $1.83 billion for the stake, though the company valued it at little over $80 million three years later.
In 2012 the Indian supreme court cancelled 122 licences for 2G services, including those held by Uninor and other operators, after a former telecoms minister and others were charged with corruption for alerting potential bidders to the terms of the auction. India’s Comptroller and Auditor General later estimated that, as a result of the information, the government received $26 billion too little for all the 2G licences.