Bharti Airtel on Thursday said it will acquire Videocon Telecom’s radio frequency spectrum in six circles for Rs.4,428 crore in yet another deal after the government liberalised the trading and sharing of scarce airwaves among operators.
“Bharti Airtel has entered into a definitive agreement with Videocon Telecommunications Limited to acquire, at an aggregate consideration of Rs.4,428 crore, the rights to use 2×5 MHz spectrum in the 1,800 MHz Band,” the company said in a regulatory filing.
The six circles are Bihar, Haryana, Madhya Pradesh, Uttar Pradesh (East), Uttar Pradesh (West) and Gujarat. The spectrum allocation in these circles is valid till December 18, 2032.
“Bharti Airtel’s plan to acquire 1800MHz spectrum in six Indian service areas, from smaller telco Videocon highlights Bharti’s need to boost its 4G spectrum amid pending competition from the entry of Reliance Jio, part of Reliance Industries, in second half of 2016,” said Fitch Ratings.
The acquisition will give Bharti the ability to offer 4G services in 19 of 22 circles compared with Jio, which has access to 4G spectrum in all 22 circles. Vodafone and Idea have 4G spectrum in five and 12 circles, respectively, the ratings agency said.
It further said: “Bharti’s acquisition price of Rs.44 billion is about 65 percent higher than the regulatory auction reserve price – adjusted for the residual life of 16 years – as the spectrum is contiguous to Bharti’s existing spectrum in 180 MHz.”
This deal came a day after Idea Cellular terminated its spectrum trading agreement with Videocon Telecom for its Gujarat and Uttar Pradesh (West) circle.
Earlier, Reliance Communications had announced that it has signed a deal for trading and sharing of airwaves with Jio in the 800 MHz band, covering virtually the entire country. A roaming deal was also on the cards.
The ratings agency said the top four Indian telcos have been keen to acquire spectrum from smaller unprofitable firms since September 2015, when the regulator allowed spectrum trading among telcos.