Less than a month after Vodafone confirmed it is in talks to merge with Idea Cellular and create India’s largest mobile operator, one piece of M&A has been confirmed in that space. Bharti Airtel has gobbled up smaller player Telenor India in a deal announced today.
The Airtel-Telenor deal is subject to regulatory approvals, but both sides said it should be completed within the next 12 months.
Airtel-Telenor isn’t quite the mega deal that Vodafone -Idea could be, but nonetheless it is a notable coming together. Airtel is India’s largest operator with an estimated 269 million subscribers, while Telenor will add 44 million (and just under four percent marketshare) to that number. Vodafone and Idea rank second and third with around 200 million and 177 million customers so, if and when they do come together, they will overtake Airtel at the top as things stand.
Numbers aside, the two deals are a sign of disruption triggered by the emergence of challenger Reliance Jio and its aggressive 4G strategy. Funded by India’s richest man Mukesh Ambani, it introduced a series of low-cost offerings last November which saw it reach 100 million subscribers in 170 days.
Reliance Jio has work to do on its nationwide coverage, however, and it remains to be seen what effect the introduction of tariffs (and the end of its free data promotion) on April 1 will have on its numbers.
Telenor, which is headquartered in Norway with a global presence, entered India in 2008 and today its services are available in six telecom circles in the country. Last year, it cleared six billion NOK ($720 million) in revenue with an operating cash flow of negative 0.4 billion NOK ($48 million).
“We believe today’s 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 with Airtel,” Telenor CEO Sigve Brekke said in a 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 would not have given an acceptable level of return,” Brekke added.
“The agreement underlines our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust spectrum portfolio spread across multiple bands,” said Bharti Airtel Managing Director and CEO (India and South Asia) Gopal Vittal.