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Bharti Airtel ends Reliance Jio’s advantage with spectrum deals; becomes a pan-India 4G player
Bharti Airtel's acquisition of Aircel's 4G airwaves has taken out Reliance Jio Infocomm's first-mover advantage in the fast mobile broadband turf, with India's No. 1 telco becoming a pan-India 4G player even before the Mukesh Ambani-owned firm launches commercially.
The buy will also reduce Airtel's uncertainty and need to bid aggressively in the airwave auctions slated for July, analysts said.
Since "Bharti now has the ability to offer LTE in all 22 circles, Reliance Jio has no first-mover advantage anywhere, anymore," brokerage Kotak Institutional Equities said in a note.
The Mukesh Ambani telco has kept a tight lid on the timing of its commercial launch, but brokerages expect a soft launch in April itself and a wider commercial launch by December. Jio had rolled out services for its 1.2 lakh employees and partners last December.
Acquisition of Aircel's 4G airwaves in eight circles on the heels of Videocon's, analysts said, would also propel Bharti Airtel's overall spectrum market share to 21%, racing past Bharat Sanchar Nigam's 18% and Reliance Jio Infocomm's 13%
Last week, the Sunil Mittal-founded company announced plans to buy Maxis-owned Aircel's 4G spectrum in the 2300 MHz band in eight markets for.`3,500 crore. The eight markets are Tamil Nadu (including Chennai), Bihar, Jammu & Kashmir, West Bengal, Assam, North East, Andhra Pradesh and Orissa. Aircel's 4G airwaves in the 2300 MHz band used for 4G are valid till September 20, 2030.
Citigroup added that the Airtel's spectrum buys from Aircel and Videocon will increase estimated net debt in this fiscal year by only 8%. Adjusted net debt/EBITDA will be 2.7x (2.4x on current estimates).
Apart from pan-India LTE coverage, Bharti will have an LTE presence in both TD (on 2300 MHz)/FD (1800 MHz) variants in 13 circles, including each of its leadership circles among the metros and Category A service areas, where capacity and coverage are key," said Goldman Sachs in a note to clients.
Acquisition of Aircel's 4G airwaves, the US brokerage said, would also leave India's biggest telecom company "well placed to gain market share from (rival incumbents) Vodafone India and Idea Cellular, and also defend its market position once Jio launches".
Analysts at Goldman Sachs, in fact, believe "Jio would not have any capacity advantage versus Bharti in most circles" adding that "it is unlikely that Jio will be able to take market share from Bharti by competing on price", a view seconded by Deutsche Bank.
"We believe Bharti has the cost-position, scale and cashflows to defend its revenue share and margins against the impact of Jio's launch," said Deutsche Bank in a note seen by ET.
Morgan Stanley also believes Bharti's countrywide 2300 MHz airwave holdings will stand it in good stead.
"4G spectrum in the 2300 MHz band is proving to be valuable with its lower spectrum usage charges (SUC), developing equipment and handset ecosystems, as most of the incremental smartphones shipped are multi-mode/multi-band, and thus 2300 MHz compatible," said the US brokerage.
Brokerage BNP Paribas feels Bharti has enough spectrum for coverage and capacity, and does not need to spend much in the next auction, once it concludes recent 4G spectrum acquisitions from Aircel and Videocon.
Analysts at IDFC said the deal would help India's No 1 mobile operator set aside the uncertainty of bidding in the next auction.
http://telecom.economictimes.indiatimes.com/news/bharti-airtel-ends-reliance-jios-advantage-with-spectrum-deals-becomes-a-pan-india-4g-player/51787920
Bharti Airtel's acquisition of Aircel's 4G airwaves has taken out Reliance Jio Infocomm's first-mover advantage in the fast mobile broadband turf, with India's No. 1 telco becoming a pan-India 4G player even before the Mukesh Ambani-owned firm launches commercially.
The buy will also reduce Airtel's uncertainty and need to bid aggressively in the airwave auctions slated for July, analysts said.
Since "Bharti now has the ability to offer LTE in all 22 circles, Reliance Jio has no first-mover advantage anywhere, anymore," brokerage Kotak Institutional Equities said in a note.
The Mukesh Ambani telco has kept a tight lid on the timing of its commercial launch, but brokerages expect a soft launch in April itself and a wider commercial launch by December. Jio had rolled out services for its 1.2 lakh employees and partners last December.
Acquisition of Aircel's 4G airwaves in eight circles on the heels of Videocon's, analysts said, would also propel Bharti Airtel's overall spectrum market share to 21%, racing past Bharat Sanchar Nigam's 18% and Reliance Jio Infocomm's 13%
Last week, the Sunil Mittal-founded company announced plans to buy Maxis-owned Aircel's 4G spectrum in the 2300 MHz band in eight markets for.`3,500 crore. The eight markets are Tamil Nadu (including Chennai), Bihar, Jammu & Kashmir, West Bengal, Assam, North East, Andhra Pradesh and Orissa. Aircel's 4G airwaves in the 2300 MHz band used for 4G are valid till September 20, 2030.
Citigroup added that the Airtel's spectrum buys from Aircel and Videocon will increase estimated net debt in this fiscal year by only 8%. Adjusted net debt/EBITDA will be 2.7x (2.4x on current estimates).
Apart from pan-India LTE coverage, Bharti will have an LTE presence in both TD (on 2300 MHz)/FD (1800 MHz) variants in 13 circles, including each of its leadership circles among the metros and Category A service areas, where capacity and coverage are key," said Goldman Sachs in a note to clients.
Acquisition of Aircel's 4G airwaves, the US brokerage said, would also leave India's biggest telecom company "well placed to gain market share from (rival incumbents) Vodafone India and Idea Cellular, and also defend its market position once Jio launches".
Analysts at Goldman Sachs, in fact, believe "Jio would not have any capacity advantage versus Bharti in most circles" adding that "it is unlikely that Jio will be able to take market share from Bharti by competing on price", a view seconded by Deutsche Bank.
"We believe Bharti has the cost-position, scale and cashflows to defend its revenue share and margins against the impact of Jio's launch," said Deutsche Bank in a note seen by ET.
Morgan Stanley also believes Bharti's countrywide 2300 MHz airwave holdings will stand it in good stead.
"4G spectrum in the 2300 MHz band is proving to be valuable with its lower spectrum usage charges (SUC), developing equipment and handset ecosystems, as most of the incremental smartphones shipped are multi-mode/multi-band, and thus 2300 MHz compatible," said the US brokerage.
Brokerage BNP Paribas feels Bharti has enough spectrum for coverage and capacity, and does not need to spend much in the next auction, once it concludes recent 4G spectrum acquisitions from Aircel and Videocon.
Analysts at IDFC said the deal would help India's No 1 mobile operator set aside the uncertainty of bidding in the next auction.
http://telecom.economictimes.indiatimes.com/news/bharti-airtel-ends-reliance-jios-advantage-with-spectrum-deals-becomes-a-pan-india-4g-player/51787920
