Telenor and Tikona in discussions to merge
What's the story
Norwegian company, Telenor is in discussions with Tikona Digital to merge their broadband spectrum business. Reports suggest that the voice business is likely to be excluded from the potential merger and the focus will be on the data business. Reliance Jio's entry has led to consolidation amongst telecom players; last week, Reliance Communication merged with Aircel creating the fourth largest telecom company.
Introduction
Telenor India
Telenor India is part of Telenor group that is present across 13 markets in Asia and Europe. Telenor India has 4G airwaves in seven states but offers mobile services in six - Gujarat, Maharashtra, Goa, UP, AP and Bihar. It has over 53 million subscribers. As recently as July, Telenor was contemplating exiting India and Vodafone was speculated to buy out Telenor's India operations.
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Telenor: Won't participate in spectrum auction
"We recognize the significant operational and financial improvement delivered by our Indian operation. We have however, after thorough consideration, decided not to participate in the upcoming spectrum auction, as we believe the proposed spectrum prices do not give an acceptable level of return."
Profile
Tikona Digital
Mumbai headquartered Tikona Digital Networks has 4G spectrum and is present in five circles - Gujarat, Himachal Pradesh, UP and Rajasthan. It recently received approval from the Foreign Investment Promotion Board to increase its foreign equity up to 76.73%. Tikona Digital is backed by marquee investors like Goldman Sachs, IFC, L&T Infra Finance & Oak Investment Partners.
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Telenor and Tikona refuse to confirm or deny
Telenor refused to comment on the news and said, "As a general principle, we do not comment on rumors and speculations in the market." Tikona Digital Networks responded by saying, "As a company policy, we do not comment on speculation."
Details
Impact of the Telenor-Tikona merger
The merger will allow both companies to synergize their existing teams and operational capabilities. In the event the deal goes through, Telenor India and Tikona Digital will have access to spectrum footprint in newer circles. Late last year, reports suggested that Tikona Digital Networks was exploring selling its 4G spectrum to Vodafone India for Vodafone to widen its footprint prior to Reliance Jio's entry.