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Idea Cellular and Videocon Telecom scraps Rs 3,310 Crores Spectrum deal

Idea Cellular Ltd. has called off its Rs 3,310 crores spectrum deal with Videocon Telecommunications for two circles; Gujarat and Uttar Pradesh. The two companies released a joint statement noting that they both agreed to drop the deal.

The deal was signed last November for the purchase of radio airwaves held by Videocon Telecom in the states of Uttar Pradesh and Gujarat, and it would be used by Idea to launch 4G services in those areas.

When Idea announced the deal last year, it was termed as the first spectrum deal of the country. Videocon had acquired the 1800MHz referred to as 2G spectrum for the two service areas in November 2012. It made an upfront payment of Rs 438.57 crore to the government for a total deal of Rs. 1,329 crore. Idea had intended to use the spectrum to launch high-speed mobile broadband 4G LTE service.

In a joint statement by the two companies, it noted that Idea’s board of directors had empowered the company to enter into a purchase agreement for the “Right To Use 1800 MHz Spectrum” owned by Videocon. The spectrum would be used in areas of Gujarat and U.P. (West).

The statement added that Idea would pay Rs 3,310 crore for the spectrum. The report notes that both parties did not file a public intimation of this transfer agreement for ownership of the spectrum under spectrum trading guideline with DoT. Also, there is no cost implication to Idea due to the termination of this agreement.

Idea noted that it is still continuing to launch its high-speed mobile broadband 4G LTE service. It recently launched 4G service in the 10th telecom service area of Maharashtra & Goa from Nagpur city.

The company also noted that it currently owns 3G and 4G spectrums in 17 service areas. Both represent 87% of its revenue with 4G coverage represents 61% of total revenue. Idea is now offering high-speed mobile broadband services (4G & 3G) in about 4,500 towns and 60,000 villages.