Must gain spectrum assets!

The second largest telco in the world by subscribers as well as revenues is also the second largest operator in India. However, it seems to be lagging somewhat when it comes to 4G rollouts, whether existing or planned, India being Vodafone’s twentieth market where it has launched 4G. The telco has launched 4G LTE on the 1800 MHz band in the five circles of Delhi, Mumbai, Kolkata, Karnataka and Kerala, which together account for around 50 percent of the company’s data revenues. It also has the option to launch 4G in two more circles of Tamil Nadu and Punjab, as it has the required spectrum for these circles.

In December 2015, there were reports in the media that Vodafone is in early talks with Tikona, which owns BWA spectrum in the 2300 MHz bands for the five circles of Gujarat, UP East, UP West, Rajasthan and Himachal Pradesh. However, there seems to have been no significant development beyond that.

At the moment, Vodafone risks lagging the competition on the 4G front, and it would need to find ways to bolster its LTE presence in more circles. While it has stayed put as the No. 2 service provider in what may be broadly termed as the voice age, the dynamics of the telecom market are changing very fast in the data era, with 3G having become nearly ubiquitous and with big-ticket 4G launches being round the corner.

Vodafone certainly needs to have more 4G circles to offer, and Tikona is perhaps the only significant M&A option still left around (after Airtel has struck deals with Videocon Telecom and Aircel). Yes, Tikona has BWA spectrum in the 2300 MHz bands while Vodafone has deployed LTE in the 1800 MHz bands across its five 4G circles so far, and as such, Tikona’s airwaves may not be the ideal match for Vodafone. However, such an arrangement could give Vodafone some immediate 4G footprint, and hence a much needed parity with the other major competitors.

Other options would include spectrum sharing and gaining new capacities through a future auction, which as noted earlier, could be risky to bet upon.