Reliance Jio Effect: Consolidation Is The Name Of The Game As Airtel Acquires Telenor

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Reliance Jio Effect

The dawn of Reliance Jio on the Indian telecom horizon has put many plans into aterminal tailspin. With news that telecom leader Airtel has acquired the Indian arm of the Norway-based telecom giant Telenor, the consolidation of the Indian telecom industry has well and truly begun. Earlier, Vodafone had merged with Idea Cellular in a move which would create the largest telecom entity in the country. In a very short span of time, Reliance Jio has acquired 100 million users and has put a dent in the consumer count of many domestic giants. Reports peg Airtel’s acquisition at Rs 1,600 crore.

The exit of the Norwegian giant has not raised any eyebrows: it was on the cards for some time now. The group, which had in 2008 acquired 122 licenses for operating in all the domestictelecom circles, had been facing serious losses over the past few years. The deal will gain Bharti Airtel will gain 44 million new subscribers, according to this report by Business Standard. Airtel’s current customer base of 269 million will get supplemented by this deal as well. In return, Telenor will not have to pay any severance charges in lieu of the infra contracts as well as the tower lease contracts. Bharti Airtel will also have to take charge of network commitments to IBM, Ericsson, and Nokia.

Job Losses To Follow?

There are contradictory reports on this sensitive reports.The Telenor buyout may lead to a number of job losses in the telecom industry, which is facing a bloody war of attrition. A research report by India Ratings and Research has suggested that job cuts may enter in the next two years. This will mean that the hiring segment will take a hit. Salaries may also dip as employee salaries make up 4-5 percent of the total sales revenues. This may lead to a lowered hiring sentiment as well. Traditionally, whenever such a deal happens, jobs are lost as a result of restructuring and consolidation.

Airtel and Vodafone may end up being the last two players standing before the relentless onslaught of Reliance Jio. Airtel and Vodafone have hence been on an acquisition spree of late.The latest Telenor acquisition will also aid Bharti Airtel in gaining additional spectrum in the crucial 1,800 MHz band. It will also help the giant to gain a toehold in seven circles, Andhra Pradesh, UP, Assam, Bihar, Gujarat, and Maharashtra. Airtel will also be able to access the 43.4 Mhz spectrum in the 1800 MHz band.

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