New Delhi: Bharti Airtel on Thursday struck a Rs 4,428-crore deal to buy Videocon Telecom’s spectrum in six regions, a day after Idea Cellular called off a pact for the same spectrum in two circles.
In a bid to increase network coverage, Bharti Airtel will buy 1,800 megahertz band spectrum from Videocon in Bihar, Haryana, Madhya Pradesh, Uttar Pradesh (East and West) and Gujarat.
The deal came close on the heels of Idea last night announcing calling off its November pact to buy Videocon’s airwaves in Gujarat and UP (West) for Rs 3,310 crore.
The deal with Videocon will help Airtel strengthen its footprint in 4G space ahead of the launch of Reliance Jio’s fourth-generation wireless services later this year.
“Bharti Airtel has entered into a definitive agreement with Videocon Telecommunications Ltd (VTL) to acquire, at an aggregate consideration of Rs 4,428 crore, rights to use 2×5 MHz spectrum in 1800 MHz band for six circles,” the company said in a BSE filing.
The closing of the transaction is subject to satisfaction of standard conditions.
Airtel is likely to pay about Rs 642.06 crore as service tax for the deal to the government. Announcing the Budget, Finance Minister Arun Jaitley has clarified that right to use spectrum and its subsequent transfer is a service which will attract the Service Tax.
Airtel will be buying spectrum for Bihar, Haryana, Madhya Pradesh, UP (East), UP (West) and Gujarat. Videocon had won spectrum in these six circles in the 2012 auctions for Rs 2,221.44 crore. The spectrum is valid up to December 18, 2032.
Post the deal, Airtel 4G footprint will increase to 19 circles from the current 15.
The deal comes ahead of Mukesh Ambani-owned Reliance Jio’s launching commercial 4G services across the country. Jio has got pan-India 4G spectrum and has already launched services on a pilot basis for its employees.
On the other hand, Airtel has already launched 4G services in over 350 towns across the country. The market for 4G is heating up with telecom operators including Vodafone and Idea expanding their coverage for the high-speed service.