Bharti Airtel has acquired Videocon’s spectrum in the 1800 MHz band for Rs 4428 crore across six circles including Bihar, Gujarat, Madhya Pradesh, UP (East) and UP (West), both companies said in a joint notification to BSE. In addition, both companies have agreed to conclude the transaction and has received all mandatory approvals regarding Spectrum Trading Guidelines.
The deal between Airtel and Videocon was originally announced in March after Idea Cellular had called off an earlier deal with Videocon for the same spectrum. In November 2015, Idea had entered into an agreement with Videocon to acquire the rights to use spectrum from Videocon in the 1800 MHz band in two key circles – Maharashtra and Uttar Pradesh (West) – for Rs 3310 crore; the agreement was called off by Idea.
Airtel acquired Aircel’s spectrum in 8 circles
In March Bharti Airtel bought 20 Mhz of spectrum in the 2,300MHz band from Aircel for Rs 3,500 crore, The deal allowed Airtel to offer 4G services in the eight circles of Tamil Nadu, Bihar, Jammu and Kashmir, West Bengal, Assam, the North East, Andhra Pradesh and Odisha. “With the above acquisition, Bharti Airtel will become a pan India 4G operator,” the company added in its statement.
Competition from Jio: With Airtel acquiring Videocon’s spectrum in 6 circles, it can now extend 4G services in 19 of the 22 telecom circles it operates in. Reliance Jio has a unified pan India licence, which allows it to operate 4G services in all 22 circles under the licence once it launches full-fledged operations
Airtel is mainly looking to compete with the Mukesh Amabni owned telco Reliance Jio that had opened its 4G LTE operations to the public on an invite-only basis through its employees in this month. Jio missed commercial operation launch of its telecom network in March this year; there is no official announcement regarding a full commercial launch.
User base and financials
Mobile Internet revenues for Airtel in India grew by 44.5% year-on-year to Rs 3,357 crore for the quarter ended March 31 2015 (Q4-FY16), accounting for around 18.32% of total revenues for the company in India. Mobile broadband users (3G & 4G) stood at 35.46 million, up 14.83% from 30.88 million in the previous quarter.
4G customer blow through data: In a conference call held with analysts, Gopal Vittal, MD and CEO (India & South Asia) for Airtel spoke about 4G usage trends, and data growth. At that time, Vittal said that 4G customers “tend to blow through their allowances a little bit faster,” since they (4G users) receive significantly higher speeds when compared to 3G users
700 Mhz spectrum is expensive: Vittal
Airtel had told analysts in February that the proposed 700 Mhz spectrum auction was too expensive. “We believe that the price that has been set or proposed for 700 MHz just makes it very, very expensive for us to buy any of that spectrum, so we believe we cannot afford to buy that spectrum at that price,” Vittal said.
Earlier in January, the Telecom Regulatory Authority of India (TRAI) had recommended a reserve price of Rs 11,485 crore per MHz for pan India airwaves for the next round of auctions. This includes the base spectrum pricing for seven bands, including the 700 MHz spectrum, which is being offered for the first time and supposedly offers high quality mobile broadband and 4G.