Telecom Battle Enters The Next Stage As Airtel Acquires Telenor

In a significant development in the telecom space, India's largest telecom service provider Bharti Airtel has acquired the assets of Norwegian firm Telenor’s India unit in a no-cash deal. The acquisition will include the transfer of all of the company's assets and customers to Airtel. Apart from augmenting the overall customer base and network, it will enable Airtel to increase its spectrum footprint further.

Airtel will acquire Telenor India's running operations in seven circles, namely Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East), Uttar Pradesh (West) and Assam. Its total spectrum in the 1,800 MHz band – spreading over seven circles – currently stands at 22.7 MHz. This will rise to 66.1 MHz with the Telenor acquisition.

Telenor had entered the Indian market in 2008 by acquiring a majority stake in Unitech Wireless. Its India business is a loss-making proposition, but it has 44 million subscribers. On the other hand, Airtel is India's largest wireless operator with a whopping 269 million subscribers. It has a revenue market share of over 33 per cent. With this acquisition, Airtel’s revenue market share will go up to 35.6 per cent.

Experts suggest that Airtel’s Telenor acquisition is meant to ward off the threat from Reliance Jio. After offering free service for six months, Jio will begin charging its customers for its data services from April while the calls will remain free of cost.

The telecom sector has turned into a battlefield ever since Mukesh Ambani launched Reliance Jio. This is not to dispute the fact that consolidation in the telecom space has been hastened by Jio’s significant market penetration. If the consumer is really the king, the moot question is, how many telcos will manage to survive the cut-throat competition, and how many others will finally exit the market.

Airtel’s new acquisition marks the exit of Telenor from the Indian telecom space. An article on Swarajya last year had argued that the Tatas and Telenor are the two players – with lowest market shares – to exit the telecom space fast, assuming there is a good price to be had for their customers. With Telenor gone, the next in line could be Tata DoCoMo. With the exit of Telenor, the telecom industry is currently left with seven players in the ring beyond Jio.

Consolidation is underway in the telecom space. Vodafone and Idea have already hinted at a merger. Aircel and MTS have already indicated a plan to merge with Anil Ambani-led debt-ridden RCom. This will leave only five players in the ring.