Bharti Airtel pips Idea, seals $660M spectrum deal with Videocon
Other | Photo Credit: Shah Junaid/VCCircle

Bharti Airtel Ltd said on Thursday it has signed a Rs 4,428-crore ($660 million) spectrum trading deal for six telecom service areas with Videocon Telecommunications Ltd, just hours after Idea Cellular Ltd scrapped a similar but smaller pact with the same operator.

The announcement by India’s biggest telecom operator by subscribers indicates the intensifying battle for spectrum that can be used for high-speed fourth-generation (4G) data services ahead of the impending nationwide launch of billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd.

The deal comes at a time when most top Indian telecom operators are focusing on data to boost revenue as income from voice calls stagnates. Bharti Airtel was first off the block in rolling out 4G services while the local arm of Vodafone Group Plc has also started 4G operations. But the two operators, as well as No.3 Idea and other telecom carriers, face a major threat from Reliance Jio, the only company to have pan-India 4G spectrum.

Bharti said in a statement it has signed a definitive agreement for the rights to use two contiguous blocks of 5 MHz each in the 1800 MHz spectrum band in Bihar, Haryana, Madhya Pradesh, Gujarat, and eastern and western Uttar Pradesh until 2032.

Idea’s Rs 3,310-crore (about $500 million) deal with Videocon, first announced in November and terminated on Wednesday, was for Gujarat and western Uttar Pradesh.

Idea didn't specify any reason for scrapping the deal, saying only that the two companies hadn't filed any joint intimation of the agreement with the Department of Telecom. The termination of the pact has no cost implication to Idea, it added.  

The spectrum trading deals come after the government in October changed rules to allow buying and selling of airwaves.

Idea has 4G spectrum in 10 telecom service areas, or circles in industry parlance. The deal with Videocon, one of the country's smallest telecom operators, would have expanded Idea’s 4G spectrum footprint to 12 circles that contribute 60 per cent of the Indian telecom industry's mobility revenues.

India's telecom market is divided into 22 circles that mostly coincide with states, but some large markets are divided further and some smaller ones are clubbed together. Bharti Airtel provided 4G services in 14 circles as of December 31, the company said in January when it announced its quarterly results.

Idea, however, said in its statement that it continues to "aggressively" launch its high-speed mobile broadband 4G services. On Wednesday, the company introduced its 4G services in its 10th telecom circle of Maharashtra and Goa, from Nagpur. 

The company, part of the diversified Aditya Birla group, began offering its 4G services three months ago. It now covers about 350 cities and state capitals including Bengaluru, Chennai, Hyderabad, Chandigarh and Bhopal.

Idea, which counts PE firm Providence and Malaysia's Axiata as shareholders, said it remains on track to launch 4G services in 750 key towns across its 10 telecom circles by the end of June.

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