 "Airtel-Telenor merger: Is consolidation only answer to battle Reliance Jio?")
India's top telecom network operator Bharti Airtel is buying Norwegian Telenor's India unit, in yet another consolidation move driven by upstart rival Jio's disruptive pricing.
The deal highlights how the entry late last year of Reliance Industries' wireless carrier Jio is shaking up India's crowded telecoms sector. With its free voice and deeply discounted data plans, Jio has pushed rivals to slash rates, sharply eroding their profits.
Consolidation only solution?
Entry of Reliance Jio in September 2016 and its free promotional offers have forced the industry to work towards consolidation. Some experts are of the view that consolidation is the only answer to battle a newcomer like Reliance Jio.
Airtel, TelenorAnalysts feel that the end consumer would be a beneficiary of consolidation as the top four players will be expected to make substantial investments towards improvement of infrastructure.
However, there is a flip-side to consolidation as it would mean an increase in tariff in the future.
Once competitive pressures ease in the next year or so, the current tariffs would start inching upwards, a Mumbai-based analyst said.
Consolidation is being driven by intense pricing, competitive pressure and other such mathematics, Hemant Joshi, partner, Deloitte Haskins & Sells said.
On January 30, UK-based telecom giant Vodafone announced that it was in talks for an all-stock merger of its unlisted Indian subsidiary with rival Idea Cellular. The proposed move would make the merged entity India’s largest telecom company in terms of revenue, at 43 per cent.
Disconnected from India
In 2006, Hutchison exited the Indian market with Vodafone buying a controlling stake in the company
In 2012, Dubai-based telecom major Etisalat shut operations of its Indian arm, following SC judgment to cancel 122 licences
In 2012, Sistema hinted at scaling down India operations, after SC cancelled 21 wireless telephony licences of SSTL, its Indian JV
In 2014, NTT DoCoMo announced wrapping up operations in India. Following this, DoCoMo and Tata Teleservices, its India partner, got into a spat over payment for which the litigation is on
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%