Airtel to buy Telenor’s India biz; to boost 4G spectrum portfolio

Airtel will take on Telenor's spectrum liabilities worth `1,600 cr, payable in instalments till 2026

NO-CASH DEAL

BHARTI AIRTEL said on Thursday it will acquire Telenor's India operations in a no-cash deal but take on the latter's spectrum liabilities to the government of around Rs 1,600 crore, payable in instalments till 2026.

With this, the country's biggest telco has strengthened its spectrum holding in the 4Genabled 1800 MHZ in the seven circles of Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (east), Uttar Pradesh (west), and Assam.

Bharti's total spectrum in the 1800 MHZ band in the seven circles, which currently stands at 22.7 MHZ, will go up to 66.1 MHZ. With access to Telenor's 44 million subscribers, the telco's revenue market share will increase from 33 per cent to 35.6 per cent, closing the gap with the Idea-vodafone combine whose revenue share would be 42.3 per cent, should a deal fructify.

The deal also marks Telenor's exit from India which it entered in 2008 by acquiring a majority stake in Unitech Wireless. Subsequent to the cancellation of its licences for 22 circles in 2012 by the Supreme Court, Telenor acquired spectrum in seven circles in the auctions of 2012 and 2014 and with the government later allowing 100 per cent foreign direct investment in the sector, it became a 100 per cent subsidiary of its Norwegian parent. Telenor had acquired its spectrum for around Rs 4,157 crore.

Bharti will also take over the tower lease agreements, network and IT infrastructure of Telenor along with taking over its 700-800 regular employees.

The buy would strengthen Bharti in Gujarat, Maharashtra, UP East and UP West in which it had lower RMS against its national average. With 56 per cent combined RMS, Bharti will cross the regulatory threshold (50 per cent) in Bihar which might have to be reduced within a year of merger.

Telenor’s FY16 revenues stood at Rs 4,788 crore, Ebitda at Rs 345 crore, minutes of usage at 384, average realisation per user at Rs 92 and average realisation per user at Rs 0.23.

Gopal Vittal, MD and CEO (India and South Asia), Bharti Airtel, said: "The agreement underlines our commitment to lead India's digital revolution by offering world-class and affordable services through a robust spectrum portfolio spread across bands. On completion, the proposed acquisition will undergo seamless integration ... and further strengthen our market position in several key circles. The customers of Telenor India will now be able to enjoy a range of Airtel's world-class products and services".

Sigve Brekke, CEO of Telenor Group, said: "... the agreement is in the best interest of our customers, employees and Telenor Group. Finding a long-term solution to our India business has been a priority for us, and we are pleased with our agreement. 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".