Airtel to buy Tikona’s 4G biz in 5 circles for `1,600 crore

This is Airtel's 6th acquisition in 5 years. Tikona has 20 MHz spectrum in the 2300 MHz band in these circles.

By: ENS Economic Bureau | New Delhi | Published:March 24, 2017 2:08 am
Bharti’s recent India accusations. (File)

In a move that underlines the growing consolidation as well as competitiveness in the telecom space, Bharti Airtel on Thursday acquired the broadband wireless access (BWA) business of Tikona Digital for Rs 1,600 crore. With this, Bharti has got access to Tikona’s BWA spectrum in the 2300 MHz band in the five circles of Gujarat, Uttar Pradesh (East), UP (West), Rajasthan and Himachal Pradesh.

Tikona has 20 MHz spectrum in the 2300 MHz band in these circles, which can be used for high-speed 4G data services.

Bharti has thus filled the gaps in its spectrum portfolio and now like Reliance Jio has a pan-India spectrum in the 2300 MHz band. Earlier, it did not have spectrum in this band in three circles — Rajasthan, UP (East) and UP (West). In Gujarat and Himachal Pradesh, its holding of this spectrum would now rise to 30 MHz. With the completion of this transaction, Bharti will have 30 MHz spectrum in the 2300 MHz band in 13 of the 22 circles. In the remaining nine, it will have 20 MHz, and hence its 4G data services would hugely get strengthened.

Price-wise, Bharti has not really paid a premium but just covered the interest charges of Tikona. Tikona had bought this spectrum in the 2010 auction for Rs 1,058 crore. If one goes by the price of this spectrum in the five circles concerned in the 2016 auction, it comes to Rs 1,780 crore. After adjusting the seven-year period in the 20-year lease period, the price comes to around Rs 1,246 crore.

Since 2300 MHz acquired in 2010 carries spectrum usage charge of 1 per cent of an operator’s adjusted gross revenue, Bharti’s weighted SUC would reduce. Currently, it pays around 4.3 per cent of AGR, which would reduce by around 25 basis points, translating to an annual savings of around Rs 100 crore.

Gopal Vittal, MD & CEO (India & South Asia), Bharti Airtel, said: “Airtel’s continued focus on strengthening its 4G capabilities across multiple spectrum bands will be complemented with the BWA spectrum acquisition from Tikona. We believe that combining our capacities in TD-LTE and FD-LTE will further bolster our network.” FE

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