“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.
Airtel will acquire Telenor India’s running operations in six highly populated states — Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam where company expects a high potential for growth. The proposed acquisition will include transfer of all of Telenor India’s assets and customers.
Since entry of India’s richest man Mukesh Ambani into telecom business, incumbent telecom companies are facing fierce competition as Reliance Jio (Mukesh Ambani telecom arm) has offered free voice calls and unlimited data till end of March 2017. Indian government has lost more than $100 million since entry of Reliance Jio in September last year due to company’s free data and voice offer. Indian government used to charge a fix percentage of revenue earned by telecom companies. Free voice and data service offered by Reliance Jio has eaten into profits of existing companies like Airtel and Idea.
Losses caused by JIO FAR GReater than DOT ESTIMATES, add another 1000 CR @arunjaitley @aseemmanchanda @DoT_India @rssharma3 @manojsinhabjp
— B K Syngal (@BKSyngal) February 23, 2017
British telecom firm Vodafone and Indian telecom firm Idea are also involved in talk for merger since long to tackle Reliance Jio business model. In coming months, telecom sector may witness merger of some smaller telecom players like Tata Teleservices and Videocon.
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