This morning Airtel announced that it is acquiring Telenor India, the Indian arm of Norwegian telecom major Telenor. However, this was not a happily taken decision for the company, laments the Group CEO Sigve Brekke.
“The decision to exit India has not been taken lightly,” said Brekke on the development.
The company that came to India in 2008 has been doing losses since its entry to the world’s most competitive market. And the competition got more fierce with the entry of Reliance Jio as a new telecom operator that has forced many operators to consolidate. To sustain the pressure Telenor India needed huge and regular investments. However, the group did not find putting more money to the loss-making firm anymore.
“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,” says Brekke.
For FY 2016, Telenor India’s revenue was reported at 6 billion Norwegian currency (NOK) compared to FY 2015′ revenue of 5.59 billion NOK, which is an increment of just 3%. This increment, however, was due to higher interconnect fees, says the company. The related loss in FY 2016 was at 7.3 billion NOK.
Airtel will completely take over the company and the acquisition will be completed within 12 months, both the companies said in a statement.
The acquisition includes the complete ownership of Telenor India’s spectrum, licenses and operations, its employees -around 4,500, and its customer base of around 44 million.
As part of the agreement, Airtel will take over outstanding spectrum payments and other operational contracts, including tower lease. Telenor services are commercially available in six telecom circles in India (Andhra Pradesh, Bihar & Jharkhand, Gujarat, Maharashtra, UP East and UP West), and the company also has spectrum in Assam.
From 1st quarter 2017, Telenor Group will discontinue its India operations as a business unit and stop reporting about the same.