Airtel, Vodafone, Idea 3G deal solves coverage woes

Shiv Putcha/Ovum
21 Jul 2011
00:00
News
Commentary

India’s three major private GSM operators – Bharti Airtel, Vodafone Essar and Idea – have signeda roamingagreement that will allow them to offer 3G services nationwide.

While the deal has been rumored for months, it wasn’t officially announced until July 15. The agreement allows for both inter- and intra-circle roaming across the 22 circles in India. Details of the agreement relating to pricing are still to be announced.

This is a significant deal for the Indian telecom market as it creates the first nationwide 3G service besides BSNL. Airtel, Vodafone, and Idea’s deal is especially important as the three operators have a combined subscriber market share of close to 50% and a combined revenue market share of approximately 65%.

The high combined subscriber and revenue market shares of the three operators mean that they can target a large addressable market, and more importantly, one that is high-value and more likely to upgrade to 3G.

The roaming deal was necessitated by the inability of any operator to gain a nationwide 3G footprint in the 2010 spectrum auctions. In the auction, Airtel, Vodafone, and Idea managed to secure 13, 9, and 11 licenses for $2.7 billion, $2.6 billion, and $1.3 billion respectively. Airtel and Vodafone secured the lucrative Delhi and Mumbai circles and several high-value category “A” circles, while Idea secured several category “B” circles.

The deal will enable each operator to cover all of the circles across India with the exception of Orissa, where none of the operators have a 3G license. Inter-circle agreements will allow each operator to launch services in circles where they are not licensed.

An example of this is Vodafone’s recent launch of 3G services in Andhra Pradesh, where they had previously entered into an agreement with Idea. Intra-circle agreements will be equally important as each operator can leverage the superior coverage of their partners in individual circles.

For example, while Vodafone is licensed to offer 3G services in Maharashtra, under the agreement it can leverage Idea’s superior coverage in that circle.

Related content

Comments
No Comments Yet! Be the first to share what you think!