Mobile data business prompts spectrum deals

telecom tower in India rural area
The spurt in spectrum deals — between Reliance Jio and Reliance Communications, Bharti Airtel and Videocon and Bharti Airtel and Aircel are aimed at consolidating their position in the rapidly growing data market in India.

Data business of Indian telecoms achieved 120 percent growth in the past two years.

“Data services remain major thrust area for telecom companies as the segment is relatively under-penetrated. The voice market in India has largely matured. Although the current tele-density is around 82 percent, incremental revenues have been modest,” said Ratings agency ICRA in a report on Thursday.

Kumar Mangalam Birla promoted Idea Cellular also tried to acquire spectrum from Videocon to bolster its data presence.

Anil Ambani-promoted Reliance Communications announced a cashless deal to purchase Sistema Shyam, in a merger valued at Rs 4,600 crore, in November 2015. Reliance Jio’s spectrum sharing and trading in the 800 MHz space with Reliance Communications was aimed at data business. Reliance Communications is also targeting Aircel through a share-swap.

“The growth in demand for data services and deterioration in the network quality of the telcos in the recent past have made spectrum availability and utilization key aspects of the industry,” said ICRA in its report.

Spectrum trading allows smaller telecoms to monetize underutilized spectrum and the larger telecoms to attain spectrum outside the auctions. “The trend of consolidation of spectrum holdings of the telcos is expected to continue in the medium term,” said ICRA.

Giving an update on total spectrum held by these companies, the report’s chart says Airtel tops the list with 763 MHz, Reliance Jio is next with 596 MHZ, followed by Reliance Communications (304 MHz), Vodafone (295 MHz) and Idea (271 MHz).

At the moment, Bharti and Reliance Communications are the only two companies that have spectrum in all the 22 circles for both voice and 4G data services. Reliance Jio has this in 20 circles for voice, none for 3G data and in all the 22 circles for 4G.

Since 2010, Bharti has spent a total of Rs 77,800 crore on spectrum acquisition — in auctions and outside of auctions — out of which around 50 percent has been to acquire spectrum with data capabilities.

These acquisitions have improved Bharti Airtel’s data related spectrum holding and enhanced data capabilities in the 4G space across all 22 circles, ahead of the impending entry of Reliance Jio, which till now was the only pan-India 4G spectrum holder.

Bharti Airtel’s drawback is the absence of 800 MHz, which is considered among the best frequencies for 4G service, the ICRA report on Indian telecom operators noted.