Bharti Airtel said it has entered into a definitive agreement to acquire Tikona Digital Networks’ 4G business for ₹16 billion, including spectrum and 350 sites in five telecom circles.
Tikona has 20 MHz spectrum in the 2300 MHz band in Gujarat, UP (East), UP (West), Rajasthan and Himachal Pradesh circles.
With this acquisition, Bharti Airtel will have spectrum in 2300 MHz band across all circles. Airtel plans to roll-out high speed 4G services on the newly acquired spectrum in the five circles immediately after the closure of the transaction, according to a company statement.
Telecom consolidation
After the entry of Reliance Jio’s 4G services, mergers and acquisitions have gathered pace in the country’s telecommunications industry. Idea Cellular on March 20 agreed to merge with the Indian unit of the U.K.-headquartered Vodafone Plc, making it a $23 billion giant and creating the country’s largest mobile operator, displacing Bharti Airtel.
Reliance, with an investment of $25 billion offering free voice and data service for six months, has disrupted the industry’s pricing structure. Rajan Mathews, director general of the Cellular Operators Association of India had said the current tariff war in the market may not be sustainable for long
He said that in contrast to 13 operators a few years ago, the Indian mobile telecom market is down to “four or five operators.”
Bharti Airtel had last month announced acquisition of the local unit of Norway’s Telenor. Though the companies didn’t disclose the deal size, a Deutsche Bank Market Research report pegged the value of the transaction at about $300 million, or more than Rs 2,000 crore.
Strengthening capabilities
“Airtel’s continued focus on strengthening its 4G capabilities across multiple spectrum bands will be complemented with the BWA spectrum acquisition from Tikona,” Gopal Vittal, MD & CEO (India & South Asia), Bharti Airtel, said.
Rishi Tejpal, principal research analyst at Gartner said that Airtel’s acquisition of Tikona filled the gap that it had in the TDD-LTE band mainly in UP East, UP West and Rajasthan circles. “With this acquisition Airtel will have nationwide TDD-LTE spectrum,”
He added that combined with FDD-LTE, this additional spectrum holding will help Airtel to be future ready for the surging data demands on 4G. In addition, this will also help Airtel to improve the quality of service with additional spectrum, he added.
TDD-LTE and FDD LTE are two different standards for offering 4G LTE services.
Mr. Tejpal said after the Vodafone-Idea deal, the Airtel acquisition is another step towards consolidation in the Indian telecom sector.
‘Healthy competition’
“Overall things are heading in the right direction for a healthy competition. The Indian telecom sector is under pressure and the future expansion and growth will depend on the quantum of spectrum held and the quality of services offered. Such acquisitions help operators to address the above highlighted issues,” he said.
As per the agreement announced on Thursday, the acquisition of the 4G business in Gujarat, UP (East), UP (West) and Himachal Pradesh will be undertaken by Airtel, while in the Rajasthan circle, it will be accomplished through Airtel’s subsidiary Bharti Hexacom Limited.
“The proposed acquisition will enable Airtel to fill BWA spectrum gaps in the 2300 MHz band in Rajasthan, UP (East) and UP (West), thereby securing a pan India footprint in the band. The deal will significantly bolster Airtel’s spectrum position in Gujarat and Himachal Pradesh, taking its overall BWA spectrum holding to 30 MHz each in these circles,” according to the company.
Post completion of the deal, Airtel will have 30 MHz in the 2300 MHz band in 13 circles giving it an advantage to handle the surging data demand, according to the statement.
Tikona’s Wobro business will continue to be held by shareholders of Tikona.
