Fifteen months after Airtel announced its decision to acquire the Indian operations of Norway's Telenor, the last hurdle was cleared on Monday after the Department of Telecommunications (DoT) gave its approval to the agreement.
On February 23, 2017, Telenor announced that it had entered into an agreement with Bharti Airtel Ltd, whereby the latter would take full ownership of Telenor India.
This also marks the exit of Telenor from India which had a tumultuous journey since its entry in the country's telecom space in 2008. The company was first impacted by the 2G spectrum scam and then the entry of Reliance Jio which triggered a consolidation spree in the telecom sector.
In a notification, DoT said it has transferred all licences and liabilities of Telenor India to Bharti Airtel."The present merger is taken on record without prejudice to the rights, contentions, remedies and steps which may be taken by the Department, in pursuance of any subsequent orders of any orders, judgements and decisions of Hon'ble Courts/Tribunals in related matters" pending in the Bombay High Court, TDSAT and Supreme Court."
Airtel in a statement said as a next step it will begin integrating Telenor India's operations across seven circles - Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. All existing customers of Telenor India will now become part of India's largest mobile network operator.
Airtel plans to step up investments and aggressively expand its high speed data network across the country over the coming year as part of Project Leap, its network transformation program, the statement said.
Gopal Vittal, MD & CEO (India & South Asia) said: "The acquisition consolidates our market leadership, further strengthens our network portfolio in key markets and will add to shareholder value. We would like to thank all the concerned authorities and stakeholders for granting approvals to this transaction."
"We are pleased with our agreement with Airtel and finding a long term solution to our India business has been a priority for us. I would like to thank the Telenor India team for their relentless and unwavering efforts over the years. To our customers, I would like to thank you for your loyalty and trust in our services," says Sigve Brekke, Chief Executive Officer of Telenor Group.
According to analysts tracking the sector, this deal will enable Airtel strengthen its foothold in these circles which offer high growth potential. This is a win-win situation for Airtel on spectrum holdings and customers acquisition, as it takes on high competition prevailing in the sector.
Mahesh Uppal, a telecom consultant, says the impact of the merger will be limited and essentially incremental. "The challenge is that Airtel revenues are under serious pressure, thanks to Jio. This is making it even more difficult to make the large investments it needs to make in its network so that it can remain competitive and maintain its earlier edge."
Last week, the Supreme Court dismissed the petition of DoT challenging the order of telecom tribunal TDSAT which had directed the government to clear a deal between Bharti Airtel-Telenor without a bank guarantee of Rs 1,499 crore. DoT was asking Airtel to submit a bank guarantee as one-time charges for spectrum before its approval to buy Telenor's India operations. Another Rs 200 crore was also demanded by DoT for the deferred payment of spectrum held by Telenor, which was aleady paid by Airtel.
The deal was already approved by the Securities and Exchange Board of India, BSE, NSE and Competition Commission of India.
Airtel is buying out the operations of Telenor in a no-cash deal while taking over its spectrum liabilities. As a part of the agreement, Airtel will also take over outstanding spectrum payments and other contractual commitments such as tower lease agreements. The Telenor buyout will give Airtel access to 43.4 MHz spectrum in 1800 Mhz band in seven circles and about 40 million users. The agreement was signed last year in February.
The entry of Reliance Jio has triggered consolidation in the telecom industry forcing small and marginal players to exit the hyper-competitive market. Vodafone and Idea Cellular have announced their merger, while Airtel has completed the acquisiton of Telenor India and is pursuing the buyout of Tata Group's wireless operations. Further, Reliance Jio has also agreed to buy wireless assets of Reliance Communications while Aircel has filed for bankruptcy. Following the consolidation process, India's telecom industry will be left with three major players - Airtel, Vodafone-Idea combine and Reliance Jio along with telecom PSU BSNL/MTNL.
...& ANALYSIS
- Airtel to begin integrating Telenor India's operations across seven circles
- Analysts say it will be a win-win situation for Airtel on spectrum holdings and customers acquisition
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