MUMBAI • Singtel associate Bharti Airtel, India's largest telecoms network operator, is buying Norwegian Telenor's India unit as the ultra-competitive mobile market is shaken up by the country's richest man.
Tycoon Mukesh Ambani launched Reliance Jio's 4G network in September with an audacious free service for the rest of 2016, followed by vastly cheaper data plans and free voice calls for life.
The move forced rivals - desperate to maintain market share - to slash their tariffs and scramble to match the deep pockets of Jio, which is backed by Mr Ambani's vast energy-to-chemicals conglomerate Reliance Industries.
Airtel's acquisition, which still needs to be approved by regulators, will enhance its coverage, the company said in a statement to the Bombay Stock Exchange yesterday. It also means Telenor will exit India.
"The proposed acquisition will include transfer of all of Telenor India's assets and customers, further augmenting Airtel's overall base and network," the Indian firm said in the statement. It did not disclose the financial terms of the deal.
Airtel shares surged more than 5 per cent after the Telenor deal was announced.
Last month, British mobile phone behemoth Vodafone announced that it was in talks to merge its Indian unit with Mumbai-based Idea Cellular in a move that would create India's largest telecoms company.
Global brokerage firm CLSA estimated that the pair would command a combined 43 per cent share of market revenue, ahead of Airtel, which is currently the market leader, on 33 per cent.
"The decision to exit India has not been taken lightly," Telenor Group chief executive Sigve Brekke said in the statement. "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," he added.
Telecoms analyst Baburajan Kizhakedath said Telenor was quitting India because the intense competition meant there was no scope for growth. "The Airtel-Telenor deal is probably the best exit route for Telenor," he said.
Singtel has 595 million mobile customers across 25 countries in Asia, Australia and Africa. It holds more than 31 per cent stake in Bharti Airtel.
AGENCE FRANCE-PRESSE, REUTERS