Idea buys Videocon's spectrum for Rs 3,310 crore

India's third-biggest mobile phone operator, Idea Cellular has signed a pact with Videocon Telecommunications to buy its spectrum in Gujarat and Uttar Pradesh West circles for Rs 3310 crore in a landmark airwaves trading deal. The transaction will be effective only after completion of the due diligence and written confirmation by DoT (Department of Telecommunications) on the transfer of right to use Spectrum to Idea Cellular.

The agreement for telecom circles is for a measure of 2×5 MHz contiguous blocks of 1800 MHz in each service area, with a right to use the spectrum until December 2032. Idea will use the spectrum for deployment of 4G (LTE) services.

Along with the right to use spectrum, Idea will also be taking over the outstanding 'deferred payment liability’ of Videocon Telecommunications payable to the DoT in regard of the spectrum being acquired for service areas of Gujarat and Uttar Pradesh (West) in the November 2012 auction.

Videocon had acquired spectrum in 1800 MHz band, known as 2G spectrum, in these two service areas for a total of Rs 1,329 crore in November 2012 and made a direct payment of Rs 438.57 crore to the government.

With this spectrum trading arrangement, Idea’s 4G (LTE) spectrum step will expand to 12 service areas covering over 75 per cent of Idea’s current revenue and over 72 per cent of existing 170 million quality subscribers. These 12 circles currently contribute to 60 per cent of the Indian telecom industry's mobility revenues.

After completion of this transaction, Idea would have full range of mobility services across 2G (GSM), 3G (HSPA) and 4G (LTE) technologies in all of its 8 leadership markets of Maharashtra & Goa, Kerala, Andhra Pradesh & Telangana, Madhya Pradesh & Chhattisgarh, Haryana, Punjab, Gujarat and Uttar Pradesh (West).

As of now, Idea's combined revenue market share is 30.3 per cent and subscriber market share is 28.6 per cent. Videocon Telecom is planning to sell spectrum in low-scale operation circles of Uttar Pradesh East and Bihar and is seeking a value of Rs 3,500 crore.

Idea had won spectrum in six circles - Uttar Pradesh East, Uttar Pradesh West, Bihar, Gujarat, MP and Haryana in the 2012 auctions for Rs 2,221.44 crore.

Yesterday, Idea's stock prize closed at Rs 140, which was 0.29 per cent higher on the BSE.