India's Bharti Airtel may be considering buying 2300-MHz spectrum from Aircel to help it expand its 4G footprint to better compete with Reliance Jio Infocomm.
Three sources told the Economic Times that Airtel is evaluating using the new spectrum trading regulations to purchase Aircel's 4G bandwidth.
Officially, Airtel has denied any such discussion has taken place and Aircel has declined to comment on what it calls market speculation.
But off the record, the three sources said discussions have taken place between very senior officials of both operators.
Aircel acquired its 4G spectrum in the BWA auction of 2010, paying 34.38 billion rupees ($527.3 million) for spectrum in eight of India's telecom circles. According to the report, the deal being negotiated could result in a sale price 5-7% lower than the price Aircel paid in 2010.
But the deal could face complications including running afoul of the clause placing a cap on the maximum amount of spectrum one operator is allowed to hold. The cap could be exceeded in two circles.
Five years after acquiring the spectrum, Aircel has only launched 4G services in six circles, and only for enterprise customers. One source said the company is reluctant to get caught in the brewing 4G price war.
Airtel by contrast has been seeking to increase its capacity ahead of the launch of Reliance Jio planned for late this year. Reliance Jio is expected to shake up the market with its low-cost data centric approach.