Norway-based Telenor reportedly held talks with India’s third largest telco, Idea Cellular, for a cash-less sale of its India unit, which is struggling to grow due to operations in just six circles and limited spectrum holdings. According to an ET report, the talks revolved around Idea taking over all the liabilities of Telenor India.
“The two companies have held negotiations for a transfer of all liabilities and assets without an actual payout,” a source was quoted by the publication. An acquisition would help the Aditya Birla Group-led telco to gain 4G spectrum in the 1800 MHz band, especially in some key Telenor circles such as UP West, Gujarat and Maharashtra where Idea is ranked first or second.
The deal would also allow Telenor to exit the Indian market, the report said. Telenor has spectrum in UP West, UP East, Bihar & Jharkhand, Maharashtra, Andhra Pradesh, Assam and Gujarat. It hasn’t started operations in Assam till date.
However, the report also cautioned that the deal may not succeed as it will add to Idea Cellular’s debt of over Rs 36,000 crore, and the telco may take this aspect in account. Idea Cellular recently bought additional spectrum in the October auction for almost Rs 13,000 crore. It had then increased its spectrum holding by 349.2 MHz.
Telenor, which marked down the value of its India business by almost Rs 5,000 crore since the beginning of 2016, owes close to Rs 1,900 crore to the government in deferred spectrum payments and about Rs 1,800 crore to financial institutions as debt.
It didn’t participate in the October spectrum auction, signalling its intent to leave a market where it has made losses and struggled to expand.
The GSM telco has been looking for potential buyers. It was reported to have conducted talks with UK’s Vodafone Group Plc for an acquisition. The talks were stalled before the auction due to differences over valuation.
The telco had also begun discussions with Tikona Digital Services for combining their respective data businesses in India, ET Now had earlier reported.