Telecom M&As hot up; Vodafone to buy Tikona spectrum

Soon after the soft launch of Reliance Jio'a 4G services – restricted to its employees - on Sunday, the Indian telecom space is abuzz with action. Vodafone is tipped to be in talks to buy the entire 4G spectrum of Tikona - airwaves in 2300 Mhz band.

Consolidation in the telecom space began developing soon after the government approved spectrum sharing between telecom companies in September this year (See: DoT to notify spectrum sharing rules in a week, trading rules later).

If the deal does go through, it will help Vodafone double its geographical 4G presence from the five circles it currently has.

The Economic Times reported Tikona had bought 2300 MHz (4G) spectrum in the 2010 auctions in Gujarat, Himachal Pradesh, UP (East), UP (West) and Rajasthan for over Rs1,058 crore.

Vodafone on the other hand does not have 4G airwaves in that band. It will be deploying its high-speed broadband services over the 1800 MHz band across five circles of Delhi, Mumbai, Kolkata, Karnataka and Kerala.

Vodafone, India's second-largest telecom service provider has launched 4G services across 10 towns in Kerala only.

Among the major telecom companies in India, only Reliance Jio and Bharti Airtel have airwaves in the 2300 MHz band.

Meanwhile, in a bid to further consolidate its 4G footprint, Bharti Airtel too has acquired a 74 per cent stake in Augere Wireless Broadband India . Augere, owned by France Telecom and private equity funds such as Harbinger Capital and New Silk Route, had won 20 MHz of 4G spectrum in the 2300 MHz band in the Madhya Pradesh-Chhattisgarh circle in the 2010 auction.

Airtel has already launched 4G services across 350 towns and cities in India. Currently, Bharti Airtel has 4G spectrum in 15 circles (combination of 1800 and 2300 MHz band).

Idea Cellular too has launched 4G services across South India on 1800 MHz band. The company hopes to cover all towns and cities in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana by March 2016. The company too is on a buying spree and recently acquired Videocon Telecom's spectrum in Uttar Pradesh (West) and Gujarat circles. In an earlier interview with CNBC-TV18, the company's managing director Himanshu Kapania had said that this acquisition will take Idea's 4G footprint from 10 to 12 circles.

One of the reasons behind the consolidation wave may be because Reliance owns the second-largest amount of spectrum after Bharti Airtel. It has also set up a 2.5 lakh kilometre optic fibre network route connecting 18,000 towns across India already.

However, former Airtel CEO Sanjay Kapoor cautions that while Reliance has got its first act right - putting a lot of effort into getting its network right - the challenge for telecom players across the globe is getting a glitch-free network, which is a trial and error process and could take at least two years to perfect.