Bharti Airtel's board approves acquisition of Telenor India; shares gain

Bharti Airtel on Sunday said that its board of directors have approved their acquisition deal with Telenor Communications. 

In a BSE filing, Airtel said, "The board of Directors has approved the scheme of amalgamation between Telenor (India) Communication (Transferor company/Telenor India) and Bharti Airtel (Transferee company/Airtel) and their respective shareholders and creditors."

Airtel added, "The aforesaid Scheme inter-alia envisages the issuance and allotment of 5 (five) fully paid-up equity shares of face value Rs. 5/- (rupees five only) each of Airtel to Telenor South Asia Investment Pte. Limited (the shareholder of the Telenor India) upon the Scheme becoming effective."

On February 23, 2017, Bharti Airtel announced it's definitive agreement with Telenor South Asia Investments to acquire Telenor India. 

As per the agreement, Bharti will acquire Telenor India's operations in seven circles, including the transfer of all assets (including spectrum) and customers. These seven circles are  - Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East), UP (West) and Assam. 

While Airtel's spectrum footprint will further strenghten with addition of  43.4 MHZ spectrum in the 1800 MHz band. 

Gopal Vittal, Managing Director and CEO, Bharti Airtel had said, "On completion, the proposed acquisition will undergo seamless integration, both on customer as well as the network side, and further strenghten our market position in several key circles."

Moody's Investor Services feel credit positive of Bharti Airtel - Telenor deal. 

Annalisa Di Chiara, a Moody's Vice President and Senior Credit Officer said, "Following the proposed acquisition, Bharti's spectrum holding will increase in seven circles, and its subscriber market share will increase by around 2% (based on December 2016 figures), enhancing the company's leading market position in India's highly competitive mobile telecommunications market, a credit positive, and providing further growth potential in these areas." 

As on December 2016, Telenor had a market share of 3.9% with a subscriber base of 3.8 crore, and that of Bharti Airtel is a market leader with 26.1% market share and a subscriber base of 25.8 crore. 

DiChiara also added, "It's a non-cash deal and although Bharti will take over outstanding spectrum payments and other operational contracts, including tower leases, we do not expect it will have a material impact on the company's consolidated leverage. Bharti's adjusted consolidated debt/EBITDA (including deferred spectrum liabilities) was 3.3x as of December 2016."

Shares of Bharti Airtel were trading at Rs 360.60 per share on BSE, above Rs 5 or 1.41%.