Vodafone India has emerged the most aggressive bidder in the spectrum auctions, and is learnt to have achieved its objective of bagging countrywide 4G airwaves to take on market leader Bharti Airtel and newcomer Reliance Jio Infocomm in the high-speed data communications space.
No 3 carrier, Idea Cellular, however, ended up the lowest bidder among the Big players, failing to fully bridge its 4G gaps with rivals Airtel and Jio, who have pan-India holdings, although it has managed to acquire such airwaves in all its key markets.
Vodafone is reckoned to have put in bids in excess of Rs 20,000 crore, in line with expectations of analysts who had predicted the No 2 carrier to bid aggressively as it currently has 4G spectrum in only nine of the country’s 22 telecom circles.
Details of Vodafone’s latest spectrum acquisitions are not known as the company did not issue a statement, but sources suggested the company has significantly ramped up its national 4G play and plugged 3G gaps as well.
Idea, which till date had a 4G presence in 10 markets, has pumped a relatively modest Rs 12,798 crore to strengthen its position in Maharashtra and Goa, Uttar Pradesh (West & East), Madhya Pradesh and Chhattisgarh, Rajasthan, Bihar, Gujarat, Kerala, Andhra Pradesh & Telangana, Himachal Pradesh, Haryana and Punjab, the company said in an official statement.
Idea said it can now offer 4G services in 20 circles, including nine that are new for the company.
Managing Director Himanshu Kapania said Idea had added 35 more carriers, or slots, of 5MHz of spectrum suitable for reasonable service delivery, to its existing twelve 4G carriers, and two 3G carriers. Between the two technologies, the Aditya Birla Group company can now offer broadband services throughout the country, he said.
Former Bharti CEO Sanjay Kapoor, however, said Idea by not bidding as aggressively as its rival incumbents or Jio, has “unwittingly conceded that it wishes to play second fiddle to Airtel, Vodafone and Jio in India’s data transformation”.
Analysts aren’t surprised with Idea's lower appetite, saying the No 3 carrier's balance sheet is already stressed, and any additional spectrum purchases beyond Rs 15,000 crore would have further dented its finances, hit cashflows, eaten into its profits and undermined future capex plans on 4G rollouts.
Vodafone, they said, was also better placed to bid far more aggressively since the UK-based mobile carrier recently did a huge Rs 47,700 crore ($7.1 billion approx) equity infusion to clean up its Indian unit’s balance sheet and improve leverage to borrow more. While Vodafone India’s net debt has more than halved to Rs 34,300 crore following the UK parent’s mega equity infusion, Idea’s net debt as on June 30, 2016, stood at Rs 37,657.9 crore.
Further, Idea’s interest costs and depreciation & amortisation costs shot up by 185% and 36% respectively in the April-June quarter.
Over the past five days, Vodafone and Idea have been focusing mainly on the 4G bands of 2300 Mhz and 1800 Mhz, skirting the coveted but far more expensive 4G airwaves in the 700 Mhz band.