Airtel's acquisition of Aircel airwaves is credit-positive: Moody's

Bharti Airtel's recent acquisition of Aircel's 4G airwaves in eight circles for Rs.3,500 crore through a spectrum trading deal is credit-positive, rating agency Moody's Investors Service report said here on Tuesday.

"Despite the slight increase in leverage, the spectrum acquisition from Aircel is credit positive as it further extends Bharti's 4G footprint across all circles making it a pan India 4G operator," the report stated.

The company has rolled out 4G services in a total of 427 cities across 14 circles already, as it had secured a pan-India data enablement in the 2010, 2014 and 2015 auctions, through a combination of the 900Mhz, 1800Mhz and 2300Mhz bands.

"Bharti Airtel and its subsidiary, Bharti Hexacom have entered into a definitive agreements with Aircel and its subsidiaries Dishnet Wireless and Aircel Cellular to acquire rights to use 20 MHz of 2300 band 4G spectrum for eight circles for an aggregate consideration of Rs.3,500 crore," Bharti Airtel earlier said in a statement.

The eight circles are Tamil Nadu (including Chennai), Bihar, Jammu and Kashmir, West Bengal, Assam, North East, Andhra Pradesh and Odisha. The spectrum is valid till September 20, 2030.

"However, we also note the right of use for the circles of Andhra Pradesh and Orissa is subject to the revision of spectrum caps expected along with the potential auction to be conducted by the Department of Telecommunication," the Moody's report said.

The 4G spectrum is critical for the next growth phase as mobile data increasingly replaces voice as the main growth driver for mobile operators. The proliferation of cheap smartphones is also leading more Indian consumers to use their handsets to access the Internet and so demand faster data connectivity, it added.