Road to 4G: More high-speed deals between telecom companies seen

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Rishma Kapurmoneycontrol.comThe battle for 4G airwaves is fast becoming a knockout game of sorts. A look at the last couple of months is enough to tell you that a big-league telecom operator has been busy pocketing spectrum for an all-India push.Bharti Airtel has spent close to Rs 8,000 crore in two deals within as many months — as it tries to fortify its market share ahead of the impending launch of Reliance-owned Jio later this calendar. In 2010, Reliance Industries brought a stake in Infotel Broadband, giving it access to high-speed spectrum for all the 22 circles which Infotel had successfully bid. Since then about 9 telecom players have been fighting to come out of Jio’s shadow.And Airtel has managed it only now, after it bought the 4G spectrum — expected to deliver speeds of up to 10 times the 3G network — in 6 service areas from Videocon and 8 circles from Aircel, respectively.These acquisitions have helped Airtel step up its game, but a couple of developments helped: last October, the government allowed trading of airwaves; also, Jio is now expected to formally launch operations closer to the end of this calendar.Airtel’s former CEO Sanjay Kapoor told CNBC-TV18 that the Aircel deal is likely to make competition between Reliance Jio and Airtel tougher. Airtel’s future spectrum has reduced now with these purchases, added PhilipCapital. Citi responded with a ‘buy’ call on the company.Post its deal with Videocon from which it bought the relatively more efficient 1800 Mhz spectrum, Airtel has the best mix of 3G and 4G airwaves, higher than any of its competitors, said Goldman Sachs. Only a few players are left in the ring after Videocon and Aircel's exit from the 4G race. According to the PhilipCapital report, Vodafone has 4G spectrum in only 5 circles while its 3G footprint is in 16 circles. Idea Cellular, on the other hand, has 4G spectrum in 8 circles and 3G in 14 circles. The lower the band in a spectrum, the better will be its efficiency in transmitting signals. With this in mind, all eyes will be on the July auction this year, where spectrum in the 700 MHz band will be the most sought-after. The question on everybody’s lips is how many telecom players will be putting their names down for the auction. It is anybody’s guess right now. Before July, there could be more consolidation among the telecom players. It may be the only way out of the combined debt of over Rs 3.5 trillion they are battling.This consolidation wouldn’t just be about the last word in mobile technology. It will be about subscribers too as was clear from Reliance Communications’ (RCOM) decision, in February, to buy out the local unit of Russia’s Sistema JSFC. Of course, it will have access to 850 MHz spectrum for 4G, but it will also be adding over 9 million users to its base. A 'passive' consolidation already took place earlier this year when RCOM entered into a mutually beneficial deal with Jio whereby they agreed to trade and share spectrum in the 800 MHz band. This liberalisaton of spectrum — a facility where an operator can offer either data or voice services within the scope of its licence — would mean RCOM will have to shell out about Rs 5,500 crore as extra fees to DoT, says a Deutsche Bank report. The report adds: "This will ensure that Jio will have an extremely good coverage with 75-80,000 sites sites which they have indicated at launch."

In the end, it is about suitors — and finding the last mile in connectivity.(Disclosure: Network 18, which publishes moneycontrol.com, is now part of the Reliance Group.)