These circles account for 23 per cent of Bharti's revenues and armed with additional spectrum, it will eat into rivals' share
The winner, they say, takes it all. This could not be more true for India's telecom business, where the top two players in any circle or service area tend to cream the market. By acquiring airwaves in the 1,800-MHz band in six circles, Bharti Airtel is preparing to achieve just that.
By buying spectrum in the 1,800-MHz band, Bharti will be in a position to roll out high-speed broadband services (4G) in these six markets. These circles account for 23 per cent of Bharti's revenues and with additional spectrum, Bharti can lure away data clients from Vodafone and Idea in these markets.
The country's second-largest telecom company by subscribers, Vodafone, is a market leader in Haryana, Uttar Pradesh (east), and Gujarat. Vodafone does not have LTE (a 4G mobile communications standard) spectrum in any of these six markets.
Idea is a market leader in Madhya Pradesh and Uttar Pradesh (west) and has LTE spectrum in two of the six markets. Bharti can now challenge their leadership positions in Gujarat, Haryana, and Uttar Pradesh (west), where it is the number three player. Bharti is the market leader only in Bihar out of the six circles.
Analysts claim the two top operators in any market are profitable, while the number three and number four players tend to break even or lose money. Bharti is now positioned to corner a bigger chunk of the market with additional spectrum.
Says Goldman Sachs, "With Vodafone having no LTE spectrum in any of the six circles (market leader in three circles) and Idea in only two of the six circles (market leader in two circles), we believe Bharti can acquire the high ARPU (average revenue per user) customers from competition in these circles."
According to UBS, Idea losing out on Videocon spectrum in Gujarat and Uttar Pradesh (west) is a marginal negative as the deal would have improved Idea's 4G coverage from 61 per cent to 75 per cent of revenue base.
Idea currently has LTE spectrum in 10 service areas where it owns spectrum in the 1,800 MHz band and has launched high-speed broadband services in 350 towns.
India's telecom sector growth is primarily going to be driven by data. Analysts expect data to grow nine times to $38 billion by 2026. And going by the Bharti's strategy it clearly wants to be a leader in this game, which is why it has been building a spectrum bank while some of its rivals have been focused on renewing spectrum for survival in existing markets. It has the strongest spectrum holdings across the 900, 1,800, and 2,100 MHz frequency bands.
1,800 MHz
Band airwaves Bharti Airtel has bought in six circles
6
Markets Bharti Airtel will be able to roll out 4G in
23%
Of Bharti Airtel’s revenues these circles account for
