Airtel close to deal to buy Telenor India
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Bharti Airtel is reportedly in advanced negotiations to buy out Telenor’s Indian operations through a debt acquisition deal. Airtel is planning to take on debt of around 15 billion rupees ($219.6 million) from Telenor by way of payment for the purchase.
Russian telecoms group Telenor is seeking to exit the Indian market through the deal. According to the source, third-ranked Idea baulked at a deal because the operator did not want to take on additional debt, and had offered equity instead. Telenor had also approached various other operators including Vodafone but had been unable to clinch an agreement.
While Airtel is reluctant to increase its existing $12.23 billion debt burden, the operator was lured in by Telenor’s 4G spectrum holdings in seven of India’s 22 telecoms circles.
The acquisition won’t cover all Telenor’s Indian debts, and the company will have to cover the remainder, the report states.
Telenor has been considering exiting the Indian market for some time. The operator’s efforts to establish a competitive foothold in the market were dealt a serious blow by the cancellation of its 2G licenses in 2012 as part of a supreme court decision revoking 122 licenses issued under a former telecoms minister’s regime. Telenor India never fully recovered from this setback despite purchasing new licenses in seven circles.
Questions & Answers
Q.What is the primary reason Airtel is interested in acquiring Telenor's Indian operations?
What is the primary reason Airtel is interested in acquiring Telenor's Indian operations?
Airtel was attracted by Telenor’s valuable 4G spectrum holdings, which are located across seven of India’s 22 telecoms circles. This acquisition would enhance Airtel's network capabilities in those key regions.
Q.Why did other operators like Idea not pursue a deal with Telenor?
Why did other operators like Idea not pursue a deal with Telenor?
Idea declined a deal because it was unwilling to take on additional debt, offering equity instead. Telenor also approached Vodafone and other operators, but failed to reach an agreement with them.
Q.How will Telenor's remaining Indian debt be handled after the acquisition?
How will Telenor's remaining Indian debt be handled after the acquisition?
The acquisition will not cover all of Telenor’s Indian debts. Telenor will be responsible for covering the remainder of its outstanding debt once the deal with Airtel is finalised.
Q.What major setback did Telenor India face that contributed to its market exit decision?
What major setback did Telenor India face that contributed to its market exit decision?
Telenor India's efforts were severely impacted by the cancellation of its 2G licenses in 2012, following a supreme court decision. This setback occurred despite Telenor later purchasing new licenses in seven circles.
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