Telecom wars: Bharti Airtel ramps up 4G data with Rs 1,600-cr Tikona deal

With the deal, Airtel is gearing up to face Jio with strong data offering, faster customer addition

In the midst of an aggressive war in the telecom sector, leading operator Bharti Airtel on Thursday made public its plan to go big on data. The telco announced the acquisition of Tikona Digital Networks’s 4G business, including broadband wireless access (BWA) spectrum and 350 sites across five circles. With the deal, which values Tikona at Rs 1,600 crore, Sunil Mittal-led Airtel is gearing up to face Mukesh Ambani’s Reliance Jio with a stronger data offering and faster customer addition. The deal is subject to requisite regulatory approvals. 

The company’s total mobile data customers are around 54. 9 million, of whom 37.6 million are only 3G and 4G users. Jio crossed the 50-million mark for data customers in November 2016. 

Bharti gets 22.8 per cent of its total mobile revenue from data. Tikona currently has 20 MHz spectrum in the 2,300 MHz band in the Gujarat, Uttar Pradesh (East), UP (West), Rajasthan and Himachal Pradesh circles.  

Airtel plans to roll out high-speed 4G services on the newly acquired spectrum in those five circles, immediately after the closure of the transaction. 

According to the agreement, the acquisition of the 4G business in Gujarat, UP (East), UP (West) and Himachal Pradesh will be undertaken by Airtel, while in the Rajasthan circle, it will be done through Airtel’s subsidiary Bharti Hexacom. 

The proposed acquisition will enable Airtel to fill BWA spectrum gaps in the 2,300 MHz band in Rajasthan, UP (East) and UP (West), thereby securing a pan-India footprint in the band, Airtel said in a statement. 

Analysts are of the view that the payment for the deal will be a mix of cash and debt acquisition of Tikona. “Bharti Airtel has Tikona wireless valuing the company at Rs 16 billion (Rs 1,600 crore),” brokerage firm Philip Capital said in a release.

Apart from enhancement of spectrum capacity, Bharti’s weighted average spectrum usage charges (SUC) will also reduce because Tikona’s SUC is at 1 per cent of annualised gross revenue (AGR). Bharti currently pays around SUC of 4.3 per cent of AGR. With this acquisition, Bharti’s SUC is likely to reduce by 25 basis points, translating to an annual savings rate of Rs 1,000 crore.