Telenor to shell out in costly Indian exit after failing to deal with heightened competition
Telenor is to exit the Indian market, selling its operations to Bharti Airtel in a deal that will require the Norweigian telecoms giant to put a cash injection of hundreds of millions of pounds into the Indian firm.
Bharti Airtel is India's largest telecoms network operator and the consolidation is hot on the heels of news that Vodafone is in the process of a £10bn Indian tie-up with Idea Cellular, a deal that would see the newly merged firm overtake Bharti Airtel.
Read more: Here are the banks set to benefit from Vodafone's £10bn Indian merger
The Indian mobile phone market was shaken up by the entry last year of Jio, backed by India's second largest listed firm Reliance Industries, which has offered Indian customers a cut price alternative.
Vodafone, which had struggled to crack the Indian market it was forced to make a painful $5bn (£4bn) writedown of its investment in India and shelved plans for a local stockmarket listing.
Telenor's operations in India are considerably smaller than Vodafone, serving 44m customers, compared with the 390m subscribers that the combined Vodafone and Idea Cellular firm would have.
Read more: Vodafone in £10bn Indian merger talks
A spokesperson for Telenor said the firm would not receive any cash as part of the deal. Although no details on how much money the Norweigian firm would need to put into Indian operations, Ulrich Rathe, an analyst at Jefferies, estimated it would be more than 2.5bn Norweigian Krona (£240m).
"In summary, we believe this is a transaction that creates little directly quantifiable financial value but removes an overhang from the case," said Rathe.
The deal is subject to sign-off by regulators and although approval is likely the process could take around 12 months to complete.