Airtel Set to Buy Videocon's 4G Waves

Bharti Airtel will buy Videocon Telecom's 4G spectrum in six circles for Rs.4,428 crore, as the country's ` No. 1 telecom operator gears up for a battle over data services with Reliance Jio Infocomm.
The deal to buy Videocon's 4G spectrum in the 1800 MHz frequency band will extend Bharti Airtel's 4G footprint across bands to 19 circles from 15, closing the gap with Mukesh Ambani-owned Reliance Jio, the only telco with pan-India holdings in all 22 circles.
In a notice to the stock exchanges on Thursday, Bharti Airtel said it has signed a “definitive agreement“ with Videocon to buy the “rights to use 2 x 5 MHz spectrum in the 1800 MHz band“ in Bihar, Haryana, Madhya Pradesh, UP (East), UP (West) and Gujarat. Two people familiar with the matter said an additional 14.5% of the deal value -or over Rs.640 crore -will need to be paid by Bharti Airtel as service tax on the deal, as per the recent Budget proposals.
While Bharti Airtel didn't say how it plans to fund the buy, ratings agency Fitch Ratings said the telco will fund the spectrum deal from the sale of operations in Burkina Faso and Sierra Leone to France's Orange. The people cited above said the two telcos had sent an intimation to the telecom department and expect the deal to go through in 45 days. “The closing of the transaction is subject to satisfaction of the standard conditions, including conditions stated in the Spectrum Trading Guidelines,“ Bharti Airtel said.
One of the people said Videocon Telecom's employees will be absorbed into the company's other businesses, including handsets, which it will enter into aggressively in the near term. “Customers will be asked to port out via MNP (mobile number portability).“
The airwaves that Bharti Airtel is buying from Videocon are valid up to December 18, 2032. In all those circles, barring MP, Bharti has airwaves in the same band which were not auctioned and are being used for 2G. Hence, the carrier would have been able to use them for 4G only upon paying a market-linked price. But all of Videocon's airwaves are auctioned and contiguous, which make them ready to use for 4G, leaving Airtel's legacy airwaves free for 2G use, at least for now.
Sunil Mittal-led Bharti Airtel has been on a drive to acquire 4G spectrum. After buying Qualcomm's airwaves in four circles, Bharti Airtel purchased Augere Wireless, which owned 4G airwaves in the Chhattisgarh-MP circle. Both the deals netted Airtel airwaves in the 2300 MHz band and raised its holdings in that particular band to nine, including four of its own.
And including the 4G-ready airwaves in the 1800 MHz band it already holds, Airtel will have an overall 4G footprint in 19 service areas after the latest deal with Videocon. The deal becomes all the more crucial as Airtel's deal to buy Aircel's 2300 MHz 4G airwaves for eight circles had fallen through.

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