Airtel acquires Tikona's 4G spectrum

Bharti Airtel has acquired Tikona Digital's 4G airwaves for Rs.1,600 crore, ramping up its high-speed broadband spectrum capacity to take on Reliance Jio Infocomm and the Vodafone-Idea Cellular combine in a fiercely competitive market which is seeing rapid consolidation.

The deal gives the Sunil Mittal-led company access to Tikona's 4G airwaves in five circles -Gujarat, UP (East), UP (West), Himachal Pradesh, and Rajasthan. It will also narrow the gap between Bharti's pan-India 4G spectrum capacity and Vodafone-Idea's and Reliance Jio's, although the difference will still be significant.

Bharti Airtel had bagged 4G airwaves in only four of the 22 circles in the 2010 auctions.

Bharti Airtel has subsequently followed a strategy of buying out companies with 4G spectrum and this is the fifth such acquisition since 2015. It had acquired more airwaves in the 4G auctions that took place last year.

The Tikona deal, which includes taking on debt of Rs.500-600 crore, will see Airtel net 100 MHz of 4G spectrum in the 2300 MHz band equally split across the five circles, taking its total 4G holding to close to 880 MHz (including Telenor India), compared with 1,169 MHz for Jio and 1,089 MHz for the Vodafone-Idea combine. It will also get 350 cell sites in those five circles but won't take on any employees of Tikona.

The company plans to roll out high-speed 4G services on the newly acquired spectrum immediately after the deal is closed in the next four to six weeks.

Apart from increasing spectrum capacity, Bharti Airtel's weighted average spectrum usage charges will also reduce because Tikona's SUC is at 1% of adjusted gross revenue.

The combined spectrum holding of Airtel in these five circles won't breach any spectrum holding limits and the company won't have to pay any additional market price to the government for the spectrum as it was bought by Tikona in the 2010 auctions for Rs.1,058 crore.

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