India’s largest integrated Telecommunications service provider Airtel has bid for Videocon’s spectrum in six circles in the 1800MHz band, thereby significantly strengthening its 4G footprint to 19 circles from 15 earlier. It has bid at a price of Rs 44bn, which seems higher than the March 2015 auction price of Rs 30bn.
Videocon has contiguous spectrum in six circles (Gujarat, Madhya Pradesh, Haryana, UP(E and W) , and Bihar). In MP and Haryana, Bharti already has spectrum in the 2300MHz band for 4G; but, the addition of large circles – Gujarat, MP, UP(E and W) – is a major positive. Gujarat is a large and lucrative circle, but Bharti has struggled here in the last few years as Idea consistently gained share. Strengthening of product offering in Gujarat with 4G significantly improves Bharti’s chances of gaining market share.
Similarly in UP (W) and Haryana, Bharti will be able to scale its market share with an enhanced product offering. Bihar is one of its strongest circles and completing the product portfolio there will help defend its market share in the long run. Thus, the acquisition is a significant long-term positive.
The only circles left now without 4G footprint are J&K, Assam, and West Bengal. These circles are not very large and Bharti already offers 3G in West Bengal and Assam, which will help sustain market share in the medium term.
Airtel To Gain data Market Share from Incumbents – Vodafone & Idea and Pose Serious Challenge to Jio
Bharti Airtel is investing ahead of the market in scaling up its product offering. It now has the best counter to Jio (whose launch is round the corner), with almost pan-India 4G offering along with 3G and 2G. In contrast, Vodafone has 4G in only five circles and Idea in only eight. Therefore, Airtel has significant leverage, not only to successfully counter Jio’s offering, but also to gain market share from Idea and Vodafone – as data services growth continues to be significant. Here is a comparison of 4G-LTE Spectrum Footprint by leading operators in 800, 1800 & 2300 MHz band.
Airtel’s future spectrum needs should be limited. Unlike previous auctions (where buying spectrum was a compulsion because of business continuity or growth challenges), Airtel now has options. It has the choice of buying spectrum only when it is unable to meet customer requirements.