After acquiring Videocon Telecommunications’ spectrum in the 1800 MHz band across six circles in March for Rs 4,428 crore, the country’s largest telecom operator Bharti Airtel clinched another bit deal on Friday by agreeing to buy Aircel’s 2300 MHz band spectrum across all its eight circles for Rs 3,500 crore.
After acquiring Videocon Telecommunications’ spectrum in the 1800 MHz band across six circles in March for Rs 4,428 crore, the country’s largest telecom operator Bharti Airtel clinched another bit deal on Friday by agreeing to buy Aircel’s 2300 MHz band spectrum across all its eight circles for Rs 3,500 crore. With both the spectrum buys under the spectrum trading rules, Bharti will now be able to provide 4G services on a pan-India basis, across 22 circles. It had the ability to provide 4G services across 15 circles, which went up to 19 with the Videocon buy, finally to touch 22 circles with Friday’s announcement. The company is now best poised to compete with Mukesh Ambani’s Reliance Jio Infocomm, which till the other day was the only company with the ability to provide 4G services on a pan-India basis but is yet to launch its commercial services.
As with the Videocon deal, Bharti has bought Aircel’s spectrum at the most reasonable rate by agreeing to pay Rs 3,500 crore for the 20 MHz the latter has in the circles of Tamil Nadu, including Chennai, Bihar, Jammu and Kashmir, West Bengal, Assam and Northeast, Andhra Pradesh and Odisha. Aircel had acquired spectrum in these circles for a 20 years in the 2010 auctions for Rs 3,438 crore. The Telecom Regulatory Authority of India-recommended reserve price for spectrum in this band for the circles concerned in the upcoming auction is R4,380 crore. Assuming this is the final price, after discounting the five years from the 20-year spectrum lease, the price comes to Rs 3,285 crore. Under the spectrum trading rules, Aircel will have to pay 13% of the Rs3,500 crore to the government as licence fee and spectrum usage charge, while Bharti will have to pay 1% of the transaction amount. Assuming the 13% charge Rs 455 crore) is built into the deal, Bharti’s actual payout comes to Rs 3,045 crore.
The fight for 2300 MHz spectrum now in the upcoming auctions around June/July will mainly be between Vodafone India and Idea Cellular. Currently, Idea can provide 4G services in 10 circles while Vodafone can in eight. Idea had last year inked a deal with Videocon to buy its 1800 MHz spectrum across two circles but it was called off in March and Bharti acquired all of Videocon’s spectrum at a much lower price than what Idea had agreed to pay.
Now there are five circles where 2300 MHz spectrum is available with an operator called Tikona. It is quite possible that players like Idea and Vodafone will try to acquire it.