Telenor, Tikona in talks to merge parts of broadband business

Mukesh Ambani led Reliance Jio's high-profile and much anticipated entry into the Indian telecom market has triggered deal discussions amongst incumbent operators during the last 12-15 months and ET NOW learns from multiple sources familiar with ongoing negotiations that Telenor India, the arm of the Norway headquartered telecommunications group is currently exploring options to join hands with Mumbai based internet services provider Tikona Digital Networks which is backed by Goldman Sachs amongst other marque investors.

"Both parties are in active discussions for a potential merger of parts of their broadband spectrum business to address a larger market together. The focus is likely to be on the data business and the voice segment may be kept separate", said one of the sources cited above. Tikona Digital Networks also counts World Banks' private investment arm IFC, L&T Infra Finance & Oak Investment Partners as its investors.

"The deal would give Telenor and Tikona additional footprint in new circles. They can also benefit from synergies in terms of respective teams and operational capabilities," added another source familiar with the proposed transaction.

Telenor provides mobile services in 6 circles in India and has around 44 million mobile subscriptions according to the company website. The company is present in AP, UP east, UP west, Bihar, Gujarat and Maharashtra. On the other hand, Tikona Digital Networks has 4g spectrum in the 2300 MHZ band and is present in five circles - Gujarat, Himachal Pradesh, UP east, UP west and Rajasthan.

In response to an email query from ET NOW, Telenor responded saying, " As a general principle, we do not comment on rumors and speculations in the market." Tikona Digital Networks responded saying " As a company policy, we do not comment on speculation."

In March, 2016, Sigve Brekke, CEO, Telenor Grpup said, “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." The company said it may exit India unless it can beef up additional capacity for its networks at a reasonable cost.