Sunil Bharti Mittal’s dreams to become the telecom king globally may not have been realised, but the recent spate of acquisitions by Bharti Airtel has put his venture at a pole position in India.

The latest deal comes at a time when Mukesh Ambani’s telecom juggernaut — Reliance Jio — is snapping at Mittal’s heels. The no-cash-no-debt deal gives Airtel access to valuable spectrum across various bands, and 40-million users who spend over ₹160 per month on an average compared to the industry average of around ₹130. If telecom was the arena for game of thrones, Mittal just strengthened his position at the iron throne.

The deal will add around 5 per cent revenue market share to Bharti (currently at 32.5 per cent and bolsters Bharti spectrum portfolio. “Coupled with its recent acquisition of Telenor India (market share of 2.5 per cent), Bharti is likely to reach a revenue market share of 39-40 per cent and possess a market-leading spectrum portfolio,” said analysts at Deutsche Bank Markets Research.

“Bharti has leveraged the current environment to the maximum by acquiring spectrum and customers of marginal players at minimal enterprise value. We believe Bharti has the cost position and spectrum portfolio to defend its margins and cash flows against RJio,” it added.

Spectrum holding

GV Giri of IIFL said that after the deal, Bharti’s average spectrum holding would jump 25 per cent to 45.7 MHz compared to 29 MHz and 40.4 MHz for RJio and Vodafone-Idea, respectively.

“The gains from the deal include 5 MHz (liberalised and contiguous) of 2100/ 1800 in 9 and 2 circles, respectively. These circles contribute 52 per cent of industry revenue.

“Critically, Bharti almost gets pan-India 850MHz spectrum band (but only 2.5MHz in most circles and it needs at least 3MHz for VoLTE), and if it chooses to liberalise this and add just 1.25MHz in an auction, it can add a VoLTE layer to its network, subject to spectrum swap arrangements. Currently, its low frequency spectrum is in 900MHz, which is not as widespread in VoLTE,” Giri said in a research report.

According to HSBC Global Research, the transaction with Tata Telesrvices has consolidated Airtel’s leadership in the Indian wireless space.

“Bharti may make it difficult for RJio to continue with its disruptive pricing for long, which has been our concern so far. We add that even though most of the Tata spectrum comes for renewal in 5-6 years, it would still allow Bharti to defer any major spectrum purchases by a couple of years at the least, and should smoothen and accelerate its ability to migrate the present three-layer network to pure 4G without disrupting the 2G business.”

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