Norwegian incumbent heads for the exit amid intense competitive pressure.

Bharti Airtel on Thursday agreed to acquire 100% of Telenor’s Indian operation, a deal that enables the former to strengthen its competitive position in seven key telecom circles, and the latter to retreat from a market in the grip of an intense price war.

Bharti Airtel will take over Telenor’s spectrum, subscribers, licences and operations, including its employees. Telenor India currently has 44 million customers across the circles of Andhra Pradesh, Bihar, Maharashtra, Gujurat, Uttar Pradesh (UP) East, and UP West. It also owns spectrum in Assam.

Bharti Airtel said Telenor’s 43.4 MHz of 1800-MHz spectrum in particular will bolster its spectrum footprint in the above circles.

"The agreement underlines our commitment to lead India’s digital revolution by offering world-class and affordable telecom services through a robust spectrum portfolio spread across multiple bands," said Gopal Vittal, managing director and CEO, India and South Asia, at Bharti Airtel.

Telenor CEO Sigve Brekke said the decision to pull out of India is in the best interest of customers, employees, and the group.

"The decision to exit India has not been taken lightly," he said. "After thorough consideration, it is our view that the significant investments needed to secure Telenor India’s future business on a standalone basis would not have given an acceptable level of return."

Telenor entered India in 2008. In 2016, its revenues there amounted to 6 billion kroner (€680 million); its operating cash flow was negative NOK400 million.

Telenor’s future in India has been in doubt since July 2016, when the company declared that it would not participate in the spectrum auction, which took place in October. Telenor made that announcement months after Brekke had said that Telenor’s long-term presence in India depended on its ability or otherwise to secure more airwaves.

The operating environment in India deteriorated in September, when newcomer Reliance Jio Infocomm started offering free mobile services nationwide, sparking a fierce price war.

Reports in December claimed that Telenor was in talks to sell its Indian business to Idea Cellular; however, the latter subsequently entered talks to merge with Vodafone India instead.

Bharti Airtel revealed in January that it was holding talks to acquire Telenor India, but that did not stop local press reports alleging that Telenor was interested in brokering a deal with Reliance Communications and Aircel that would have left it with a 10% stake in the merged entity.

RCom and Aircel have their own issues to deal with though. The two agreed to merge in September; however, Aircel faces the possibility of having its spectrum licence cancelled. The operator is embroiled in a corruption case dating back to Malaysia-based Maxis’ acquisition of a 74% stake in the company more than a decade ago.

Telenor’s deal with Bharti Airtel is expected to close within 12 months, subject to regulatory approval from the Department of Telecommunication (DoT). Financial terms are still being finalised, Bharti Airtel said.

"On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side," Vittal said. "The proposed transaction will also create substantial long term value for shareholders given the significant synergies."