Idea Cellular in deal to buy Videocon's spectrum for Rs3,310 crore

GSM operator Idea Cellular has signed an agreement with Videocon Telecommunications to acquire the latter's spectrum in Gujarat and Uttar Pradesh (West) circles for about Rs3,310 crore. The company will use the spectrum to provide 4G (LTE) services in these circles.

Idea Cellular, which is already a leader in these two circles, would be acquiring 1800 MHz spectrum in these service areas. The Aditya Birla group company will have the right to use spectrum until December 2032, Idea Cellular said in a statement.

The transaction will be effective only after a due diligence of the spectrum and a written confirmation by telecom licensor Department of Telecommunications (DoT) on the transfer of right to use spectrum to Idea Cellular.

The effective date of spectrum trading will not be earlier than 45 days from this date of joint intimation, as defined in spectrum trading guidelines, it said.

The Rs3,310 crore investment Idea Cellular intends to make the spectrum is likely to be adjusted after the due diligence exercise. Along with the right to use spectrum, Idea Cellular will also take over the outstanding 'Deferred Payment Liability' of Videocon Telecommunications.

Videocon Telecommunications owes the DoT for the spectrum, which was awarded during the in November 2012 auction.

The amount of outstanding 'Deferred Payment Liability' after repayment of first instalment on 1 December 2015, is Rs482.26 crore. This plus interest accrued on it till the date of closing of transaction will be reduced from the payment of the aggregate consideration of Rs 3,310 crore payable for right to use the spectrum.

With this spectrum trading arrangement, Idea's 4G (LTE) spectrum footprint will expand to 12 service areas covering over 75 per cent of its current revenue and over 72 per cent of existing 170 million subscribers.

These 12 circles currently contribute 60 per cent of the Indian telecom industry mobility revenues. After completion of this transaction, Idea Cellular 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 & Telengana, Madhya Pradesh & Chhattisgarh, Haryana, Punjab, Gujarat and Uttar Pradesh (West).

Idea Cellular is the third-largest wireless operator in India with a revenue market share of 18.5 per cent (Q2FY16).