Airtel gets more spectrum power to fight Reliance Jio
The deal with Tata Teleservices is probably the sweetest deal for Bharti Airtel, which has made over five acquisitions in the last few years. Not only does Airtel get access to 40 million subscribers, it also gets access to valuable spectrum in 3G and 4G bands for practically zero cost.
Bharti combined with Tata’s airwaves will have control of 29 per cent of the total spectrum available to telecom service providers. Vodafone and Idea combined will have access to 28 per cent of the airwaves while Reliance Jio has about 19 per cent of all spectrum.
In terms of subscriber base, Airtel is already number one. But if Vodafone and Idea Cellular merger goes through then Airtel will drop down to the second spot.
“This is a good deal for Airtel and enables them to potentially become very strong and dominant player in data services market,” said GV Giri of IIFL.
The Bharti Airtel-Tata Tele combined entity would also have a share of around 40 per cent in the total telecom revenues, which will be just behind the projected 44 per cent for the Idea-Vodafone combine.
The biggest gain
In the earlier deals, Airtel has had to take the spectrum payment liabilities. But in this case Airtel will only pay about ₹1,500 crore of the ₹9,500 crore liabilities which Tata Tele has. The balance will be paid by Tata Tele. Airtel is also not taking Tata Tele’s debt. But Airtel may have to cough up $1.2 billion to the government if it wants to liberalise part of the spectrum held by Tata Tele.
The biggest gain for Airtel would be the access to 800 MHz band, which will be useful for 4G services. As of now, only Reliance Jio has major allocations in this frequency band. Airtel will have to take on board large part of Tata Tele’s 5,000 employees. This is good for the employees of Tata Tele as they were fearing a shut down of operations in which case they would have lost their jobs.