In a move to retaliate to the growing speculations of merger between Vodafone India and Mumbai-based Idea Cellular, India’s largest telecom company Airtel announces its acquisition of Telenor India Pvt. Ltd. Surely, Airtel has no intention of giving up on its decade-old dominance over the Indian telecommunication sector. Of late, leading telecom service providers in the country have been wary of the new entrant Reliance Jio, which has been making all the headlines by giving away free 4G data to its customers.
An effort to Consolidate Position
The free service offered by Reliance Jio is anticipated to erode its market position substantially in the near future, this, in turn, is raising concerns for its rival companies including, Idea, Airtel and Vodafone. Reliance Jio recently announced that it has gained 100 million users and the number is expected to grow higher in the upcoming months. Therefore, a counter response was certainly on the way, as Idea and Vodafone are on recurrent talks to initiate a merger, Airtel’s Telenor acquisition will provide it with the required force to sustain in the market pressure.
No doubt, if the merger between Vodafone and Idea takes place it will dethrone Airtel’s as the leading telecom company in India. However, Airtel has been watchful and seems to make all the right decisions. While Telenor’s seven circle operation in Maharashtra, Andhra Pradesh, Gujarat, Assam, UP (East), UP (West) and Bihar will augment Airtel’s overall customer base, the agreement will also enable Airtel to boost up its spectrum footprint in these densely populated states.
Importance of Gaining Spectrum Strength
Recently, Bharti Airtel bought 100 percent stake in Augere Wireless after seesawing negotiations that started in 2015. As spectrum is crucial to establishing a strong network, Augere’s 20 MHz of spectrum bandwidth under the 2300 MHz band in states including Chhattisgarh and Madhya Pradesh will further bolster Airtel’s 4G and 3G services.
Was the Acquisition a Worth?
Well, the deal certainly gives Airtel a much a needed impetus, spectrum expansion is one most defining feature that it carries. As Telenor bows out of the Indian market, its spectrum will be of critical value to Airtel. Currently, Bharti Airtel rolls out its 4G services in 2,100 Mhz and 1,800 MHz bandwidth, with the addition of Telenor’s 43.4 MHz the company will definitely gain more spectrum power. Telenor was looking to merge for quite a while now and was also reported to attract Reliance Communications at first. However, Airtel’s prompt swoop gave it an upper edge over other potential buyers. As other telecom companies continue to strive for further consolidation, especially after the entry of Reliance Jio’s, it was important for Airtel to act at the right moment.
Current Status of Telecommunication Sector in India
The telecom sector is the country is undergoing a phase of revolution and is focusing on providing cost-efficient world class telecom services. The spectrum bandwidth is evidently growing broader and is available in multiple bands. In addition, increasing competition and rivalry will see the sector offer much better services to consumers over the next couple of years. Leading players are actively concentrating of enhancing their spectrum portfolio in order to further increase market share and consolidate their position across the country. The possible Vodafone Idea merger could be the biggest telecom deal in India so far.