Videocon-Telenor 4G Deal Hinges on Four Key Circles

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The Videocon Group's plans to sell its 4G
spectrum to Telenor seem to have run into a
glitch, with the Norwegian carrier wanting to buy
airwaves in four circles rather than just the two
that are on offer, said two people aware of the
matter.The Norwegian company wants the airwaves
in Uttar Pradesh (East), Bihar, Madhya Pradesh
and Haryana, while Videocon Telecom Ltd (VTL) is
said to be interested in offloading just the
first two of those.
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In the event that it does agree to sell all four,
the asking price is said to be in excess of Rs
8,000 crore, a price tag regarded as too high by
the Telenor. A Telenor Group spokesperson told ET
that the company "refrains from commenting on
rumours and market speculation." Videocon is not
in a rush to sell its spectrum in Madhya Pradesh
and Haryana, where business is growing. On the
other hand, Telenor is keen on all four circles,
given the paucity of its data bandwidth holdings
and limited geographical presence.
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It is said to have been keen on acquiring
Videocon's spectrum in Uttar Pradesh (West) and
Gujarat but lost out to No 3 carrier Idea
Cellular. That's made Telenor all the more eager
to pick up spectrum in the four markets, said the
persons cited above.Analysts also expect
Telenor to step up 4G-related spectrum spending
in India after failing to buy fresh 4G airwaves
in a recently concluded auction in Thailand.
Videocon holds liberalised and contiguous
airwaves in the 1800 MHz band in Uttar Pradesh
(East), Uttar Pradesh (West), Bihar, Gujarat,
Madhya Pradesh and Haryana.
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After selling its spectrum in Uttar Pradesh
(West) and Gujarat to Idea recently, the company
had said it would be announcing deals for Uttar
Pradesh (East) and Bihar where it's looking at a
combined valuation of Rs 3,500-4,000 crore. The
company is in talks with a few operators for the
sale of 4G spectrum in Uttar Pradesh (East) and
Bihar, and is not immediately looking to sell
airwaves in Madhya Pradesh and Haryana, said
chief executive Arvind Bali. "In MP and Haryana,
VTL is looking at a spectrumsharing option to
offer 4G services and is open to entering
long-term partnerships with other operators,"
Bali told ET.
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Bali had earlier told ET that a leading overseas
carrier was the main contender for the airwaves
in Uttar Pradesh (East) and Bihar, without naming
the company. One of the persons cited above said
Videocon will consider selling spectrum in Madhya
Pradesh and Haryana "only if it gets an
attractive valuation in excess of Rs 4,000
crore," although it is unlikely to make "any
immediate suggestions to that effect as any hint
at discontinuing business could impact employee
morale and retention in these markets."
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Videocon has a combined subscriber base of 5.7
million in Madhya Pradesh and Haryana. The four
circles generate nearly Rs 36,000 crore of
revenue annually, accounting for nearly 19 of
India's annual mobile industry revenue, according
to industry estimates. Haryana and Madhya Pradesh
are growth areas for Videocon with a customer
market share (CMS) of 9.25 and 5.25,
respectively.With India's top three carriers
Bharti Airtel, Vodafone India and Idea starting
4G services, coupled with the upcoming launch by
Reliance Jio Infocomm, experts said Telenor needs
to move swiftly on data growth.
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