How the market leaders are poised on spectrum and revenues
Bharti today announced a deal with Telenor. Also, Vodafone and Idea are in a discussion to merge. RJIO is emerging as a strong player now with 100 million subs. Let's evaluate how the three entities are poised as regards to their spectrum holdings and RMS rankings.
Bharti + Telenor
Bharti is indicated by "dark green" and Telenor by "blood red". The "grey" indicates an overlap between their spectrum holdings. The cells marked "dark red" are those expiring in next 5 years.
Before the deal, Bharti had 31.83 MHz Pan India spectrum, weighted averaged by the circle's total revenues. The spectrum usage charge (SUC) payable was 3.56%.
After the deal, the combined entity now has 34.21 MHz Pan India spectrum (2.38 MHz more) and liability on account of SUC will slightly increase to 3.63%.
The detailed analysis of spectrum synergy is available in my earlier note titled "Synergy of Telenor's Spectrum with Bharti, Vodafone, and Idea".
Vodafone + Idea
Vodafone is indicated by "dark blue" and Idea by "Amber". The cells marked "dark red" are those expiring in next 5 years and those marked "red" in the bottom row indicates the circles where the combined entity exceeds the spectrum cap. The "grey" indicates an overlap between their spectrum holdings. The final numbers are corrected to reflect the spectrum cap while keeping the individual row numbers same as the operator's current spectrum holding. Hence, the totals in the bottom row cells marked "red" will not add up to reflect the numbers shown in the individual rows.
Vodafone currently has 23.07 MHz Pan India spectrum, weighted averaged by the circle's total revenues. The spectrum usage charge (SUC) payable was 4.09%.
Idea currently has 20.42 MHz Pan India spectrum, weighted averaged by the circle's total revenues. The spectrum usage charge (SUC) payable was 4.06%.
After the deal gets announced, the combined entity will have 41.41 MHz Pan India spectrum and liability on account of SUC will slightly increase to 4.19%. If one doesn't take into account the spectrum cap then the Pan India total spectrum of the combined entity will be at 43.99 MHz (2.58 MHz decrease on account of the cap).
The detailed analysis of spectrum synergy is available in my earlier note titled "Vodafone + Idea (Scenario Analysis)".
RJIO + RCOM (Sharing)
RJIO is indicated by "sky blue" and RCOM by "yellow". The cells marked "dark red" are those expiring in next 5 years.
RJIO has a Pan India spectrum holding of 29.15 MHz, weighted averaged by the circle's total revenues. The spectrum usage charge (SUC) payable is 3.22%.
RMS (Revenue Market Share) Snap Shot
The table under list the RMS rank of the individual operators.
The table under list the % RMS of the combined entity of Bharti+Tel and Voda+Idea.
The cells marked "dark red" are the circles where the combined RMS is exceeding the overall 50% cap as required by the M&A rules.
Bharti+Tel merged entity will lead in 10 of the 22 markets, in the rest Vod+Idea combined has a lead. RJIO is to scale up its revenues and hence not indicated.
(Views expressed are mine and do not reflect that of my employer)
Senior Director/ Engagement Delivery Lead at Cognizant
7 年Finally the market is poised to cater to the customers. I for one have been an Airtel loyalist, I have tried the free Jio sim but at this moment am in moved by their service. In my mind the organization with better customer service will rule the urban market (where the ARPU is higher) and price differential will rule the rural market where the numbers are. This is going to be a classic war of market share versus margins. Am sure the think tanks in each organization have deduced the same. In case they have not, no amount of mergers can help them.
Student at Beehive College of Management & Technology
7 年as JIO is a tough competitor for other network it is obvious they will take there revenge as jio captured 50%-60% market shares by providing free unlimited calls for life time or whether free 4G-LTE upto march. there will be a tough competition....
Chief Operating Officer at Yoma Micro Power
7 年Hi Parag, Thanks for sharing a great analysis. With this kind of consolidation, the market will take better and fair shape in terms of tariff. If you have some analysis for "Impact on the Employees and their Redundancy" of these "Telecom Operator" (under M&A) and the "Telecom OEMs, including Managed Services and Managed Capacity Vendors". Best, Dinesh [email protected]