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The Jio Effect: Airtel Buys Telenor, Price Undisclosed So Far

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The Jio Effect: Airtel Buys Telenor, Price Undisclosed So Far

Bharti Airtel reported its lowest profit in four years in the October-December quarter.


Highlights

  1. Deal with Telenor India to boost Bharti Airtel's spectrum holding
  2. Telenor India has operations in six states in India
  3. Indian telecom sector is witnessing consolidation after Jio's entry

Mumbai: Bharti Airtel, the largest telecoms network operator, is buying Norwegian Telenor's India unit, in yet another consolidation move in India's telecom sector driven by upstart rival Jio's disruptive pricing. 

Bharti Airtel said on Thursday it will buy Telenor (India) Communications Pvt Ltd, as part of which it will acquire the Norwegian company's operations in six states. It did not disclose financial terms of the deal. 

The entry late last year of Reliance Industries' wireless carrier Jio into the crowded sector with its free voice and deeply discounted data plans has pushed rivals to slash costs, sharply eroding their profits. 

Bharti Airtel reported its lowest profit in four years in the October-December quarter while No. 3 player Idea Cellular posted its first-ever quarterly loss for the same period. 

Jio's gameplan is also sparking consolidation moves. 

Britain's Vodafone Group said last month it was in talks to merge its Indian subsidiary with Idea Cellular to create India's largest mobile operator with about $12 billion in sales.

And earlier, Reliance Communications had entered into an agreement to merge its wireless business with smaller rival Aircel.

"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 will not give an acceptable level of return," Sigve Brekke, CEO of Telenor Group, said in a statement.

Shares of Bharti Airtel, in which Singapore Telecommunications is the second-biggest shareholder, jumped 5.5 percent in early Mumbai trade after the deal was announced.

© Thomson Reuters 2017


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