The country’s third largest telecom services provider, Idea Cellular, will buy spectrum in Gujarat and Uttar Pradesh (West) from Videocon Telecommunications for Rs 3,310 crore ($499 million) to boost its high-speed data services.
Videocon Group is looking to monetize its spectrum across most of the circles and plans to raise another Rs 9,000 to Rs 10,000 crore from spectrum sale,” Videocon Group chairman Venugopal Dhoot told The Hindu.
This is the first deal after the government allowed telecom companies to trade mobile airwaves in September to address the problem of shortage of spectrum and improve services for mobile phone users facing issues such as frequent call drops. Idea Cellular intends to use the spectrum for introducing its 4G services in these areas next year, according to a statement from the company.
“With this spectrum trading arrangement, Idea’s 4G (LTE) spectrum footprint will expand to 12 service areas covering over 75% of Idea’s current revenue and over 72% of existing 170 million quality subscribers on VLR. These 12 circles currently contribute 60% of the Indian telecom industry mobility revenues,” according to the statement.
Along with the right to use spectrum until 2032, Idea will also be taking over the outstanding liability of Videocon that the latter has to pay to government for the airwaves.
“The amount of outstanding on the Deferred Payment Liability after repayment of first instalment on December 1, 2015 by seller (Videocon) will be Rs 482.26 crore and this amount plus interest accrued thereon till the date of closing of transaction will be reduced from the payment of the aggregate consideration of Rs 3,310 crores,” according to the statement.
“UPE, UPW & Bihar are our low operation circles, and we were looking at exercising Spectrum Trading options…We are in active discussions with operators for UPE and Bihar to exercise spectrum trading option, and we are looking at valuation of at least Rs 3,500 Cr considering the potential,” Arvind Bali, Director and CEO Videocon Telecom said in the statement
He added that the firm is looking at investing part of the proceeds to strengthen circles in MP, Haryana and Punjab.
Published - November 25, 2015 04:16 am IST
