Aditya Birla Group’s Idea Cellular has signed a pact with Videocon Telecommunications to buy its spectrum in Gujarat and Uttar Pradesh West circles for Rs 3,310 crore in a landmark airwaves trading deal. The pact for telecom circles is for a quantum of 2×5 MHz contiguous blocks of 1800 MHz in each service areas, with a right to use spectrum until December 2032. Idea will use the spectrum for deployment of 4G (LTE) services in these areas. “The transaction will be effective only after completion of the due diligence and written confirmation by DoT (Department of Telecommunications) on the transfer of right to use spectrum to Idea Cellular,” Idea said.
The effective date of spectrum trading will not be earlier than 45 days from the date of joint intimation, as defined in guidelines. “Along with the right to use spectrum, Idea will also be taking over the outstanding ‘deferred payment liability’ of Videocon Telecommunications payable to the DoT in respect of the spectrum being acquired for service areas of Gujarat and Uttar Pradesh (West) in the November 2012 auction,” it said in a statement.
Idea shares closed 0.29 per cent higher at Rs 139.85 on the Bombay Stock Exchange. However, Videocon shares lost 1.92 per cent at Rs 130.30.
The amount of outstanding after repayment of first instalment on December 1, 2015 by the seller will be Rs 482.26 crore and this amount and the interest accrued till the date of closing of transaction will be reduced from the payment of the aggregate consideration of Rs 3,310 crore payable for right to use the spectrum, it said.
Videocon had acquired spectrum in 1800 MHz band, known as 2G spectrum, in these two service areas for a total of Rs 1,329 crore in November 2012 and made upfront payment of Rs 438.57 crore to the government.
With this spectrum trading arrangement, Idea’s 4G (LTE) spectrum footprint will expand to 12 service areas covering over 75 per cent of Idea’s current revenue and over 72 per cent of existing 170 million quality subscribers. These 12 circles currently contribute 60 per cent of the Indian telecom industry mobility revenues.
After completion of this transaction, Idea would have full range of mobility services across 2G (GSM), 3G (HSPA) and 4G (LTE) technologies in all of its 8 leadership markets of Maharashtra & Goa, Kerala, Andhra Pradesh & Telangana, Madhya Pradesh & Chhattisgarh, Haryana, Punjab, Gujarat and Uttar Pradesh (West).
As per the latest Trai release in these 8 telecom service areas, Idea combined revenue market share is 30.3 per cent and subscriber market share is 28.6 per cent.
Videocon Telecom is planning to sell spectrum in low-scale operation circles of Uttar Pradesh East and Bihar and is seeking a value of Rs 3,500 crore.
The company had won spectrum in six circles — Uttar Pradesh East, Uttar Pradesh West, Bihar, Gujarat, MP and Haryana in the 2012 auctions for Rs 2,221.44 crore.