Bharti + Tikona deal

Today Bharti announced a deal with Tikona for the 2.3 GHz band. The following table is the snapshot of the combined spectrum map of the two entities.

Tikona's spectrum in the 2.3 GHz band has been marked as "violet". This map also includes Telenor's spectrum that Bharti recently acquired (all marked "Green"). The key metric that we might be interested in listed as under.

1. Bharti's Pan-India WA (on total industry revenues) spectrum will increase by 2.19 MHz (From 34.21 MHz to 36.4 MHz)
2. Bharti's SUC (Spectrum usage charge) will slightly decrease from 3.63% to 3.39% (2.3 GHz band has lower SUC rates).
3. Bharti with 36.4 MHz has the 2nd largest spectrum holding after Vodafone+Idea combined @ 41.41 MHz Pan-India WA (after adjusting the cap) followed by RJIO+RCOM combined @ 29.15 MHz Pan-India WA.
4. For more details, you can refer to my earlier note titled "How the market leaders are poised on spectrum and revenues".
5. Tikona had acquired 2.3 GHz spectrum in the year 2010 for Rs 1058 Cr.
6. As per reports, Tikona is selling it to Bharti for Rs 1600 Cr.
7. As per the latest market price, the cost of Tikona's 2.3 GHz spectrum is will cost Rs 1784 Cr (20 years validity).
8. Mapping Tikona's spectrum for 13 years validity (7 years have expired) the value at current price translates into Rs 1160 Cr.
9. Hence, it appears that Bharti is paying approximate Rs 440 Cr more and maybe to cover up the interest costs.

With this acquisition, Bharti now has a Pan-India 2.3 GHz footprint at par with that of RJIO.

(Views expressed are mine and do not reflect that of my employer)