Airtel plans to roll out high-speed 4G services on the newly acquired spectrum in those five circles, immediately after the closure of the transaction.
According to the agreement, the acquisition of the 4G business in Gujarat, UP (East), UP (West) and Himachal Pradesh will be undertaken by Airtel, while in the Rajasthan circle, it will be done through Airtel’s subsidiary Bharti Hexacom.
The proposed acquisition will enable Airtel to fill BWA spectrum gaps in the 2,300 MHz band in Rajasthan, UP (East) and UP (West), thereby securing a pan-India footprint in the band, Airtel said in a statement.
Analysts are of the view that the payment for the deal will be a mix of cash and debt acquisition of Tikona. “Bharti Airtel has Tikona wireless valuing the company at Rs 16 billion (Rs 1,600 crore),” brokerage firm Philip Capital said in a release.
Apart from enhancement of spectrum capacity, Bharti’s weighted average spectrum usage charges (SUC) will also reduce because Tikona’s SUC is at 1 per cent of annualised gross revenue (AGR). Bharti currently pays around SUC of 4.3 per cent of AGR. With this acquisition, Bharti’s SUC is likely to reduce by 25 basis points, translating to an annual savings rate of Rs 1,000 crore.