Airtel has acquired Aircel's BWA spectrum in 2300MHz band in 8 circles. There is no overlap of Airtel's existing spectrum footprint on 2300MHz of 9 circles and the acquired spectrum. The acquisition of Aircel?s spectrum will translate to 2300MHz footprint across 17 circles and completion of pan India 4G footprint.
The price paid of the spectrum at Rs 35bn is reasonable considering the base price in the upcoming auction is Rs 44bn. The lower price can be attributed to passage of time as Aircel acquired this spectrum (valid for 20 years) in 2010 auction at Rs 34bn. With this acquisition and completion of pan-india footprint across products the need for more spectrum will be limited- significantly reducing the risks of buying ultra-expensive 700MHz
The acquisition of spectrum is also positive from an industry M&A perspective as RCOM and Aircel were looking at a merger after paring their debt. Sale of spectrum assets by Aircel removes some uncertainty for Aircel-RCOM merger. Consolidation among operators is a significant positive for the industry and benefits the market leader, Bharti Airtel the most.
