Info-tech

This is Idea Cellular’s largest-ever spectrum purchase, says Kapania

Rajesh Kurup Mumbai | Updated on January 16, 2018 Published on October 07, 2016

Himanshu Kapania, Idea Cellular MD

‘Co will now have a pan-India mobile broadband footprint’

Idea Cellular plans to use the spectrum it acquired in the recently concluded auctions to roll out mobile broadband services. Following the spectrum acquisition, the operator has revised its capital expenditure guidance for the year to ₹8,000 crore.

“This is the largest purchase of spectrum by Idea Cellular, and this represents 64 per cent of incremental spectrum. Our overall holding has expanded to over 890 MHz of spectrum. Our share of spectrum has improved compared with other operators,” Idea Cellular MD Himanshu Kapania told BusinessLine.

Idea acquired 349.2 MHz of spectrum in the auction, which ended on Thursday, for about ₹12,798 crore. The company bought 74.6 MHz of spectrum in the 1800 and 2100 bands (Frequency Division Duplex technology) and 200 MHz in the 2300 and 2500 bands (Time Division Duplex technology).

“With this purchase, we will now have a pan-India mobile broadband footprint and expand our 4G coverage to 20 circles from the present 11. We will expand our 3G coverage to 15 service areas from the present 13,” Kapania said.

Idea Cellular says it has currently deployed 250 MHz for its GSM operations on a pan-India basis, and does not need further spectrum for these operations. Now, the Aditya Birla group company will deploy 170 MHz for 3G services in 15 markets and 480 MHz for its 4G rollout. This auction has also resulted in Idea Cellular getting a second carrier of 1800 MHz spectrum across seven leadership markets, where it is either number one or number two. These markets — Kerala, Maharashtra, Gujarat, Madhya Pradesh, Uttar Pradesh (West), Punjab and Haryana — also constitute 55 per cent of revenues and most of the company’s EBITDA.

Idea will use the 200 MHz spectrum in 16 circles, which the company hopes will provide it capacity for the next decade.

For the upfront payment of 50 per cent, a large portion will be from internal accruals, while a “small incremental” debt would be taken from banks, the company said.

Idea Cellular has to pay 50 per cent of the ₹12,798 crore upfront, while it will avail government denominated debt for the remaining 50 per cent. The company will get a three-year moratorium for the remaining 50 per cent, with interest of 9.3 per cent on equal instalments for the subsequent 10 years.

Published on October 07, 2016
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