Airtel, Voda-Idea users can get better 4G services as telcos refarm 2G/3G spectrum

KOLKATA: Millions of Bharti Airtel and Vodafone Idea customers can look forward to big improvements in 4G coverage quality once both companies wrap up refarming bulk of their respective 2G and 3G airwaves for 4G services, analysts said.
Last month, Airtel CEO Gopal Vittal said the company has refarmed 900 MHz spectrum – previously used for 2G services – in 10 markets for 4G, and expects to shut its countrywide 3G network by December, and use its 2100 Mhz band airwaves also for 4G. Former Vodafone Idea CEO Balesh Sharma too said in late-July that the company had refarmed airwaves in the 900 Mhz and 2100 Mhz bands for 4G services in seven markets, and expected to conclude its dual-network integration by June 2020, of which, spectrum refarming is likely to be a key element.

As things stand, both older carriers, analysts say, could have an edge over Reliance Jio Infocomm in bagging quality 4G customers in coming years as their respective 4G airwave holdings would be much higher than the Mukesh Ambani-led telco’s, post-refarming.

ICICI Securities estimates Bharti Airtel and Vodafone Idea will have 28% and 33.1% more 4G carriers respectively than Jio after refarming their 2G/3G airwaves.

Analysts expect 4G data consumption to grow sharply, given that current average usage per 4G user is 11.6 GB a month, well below the average 45 GB monthly data allowance per customer, coupled with low 4G penetration levels at 41%.

According to ICICI, Voda Idea and Airtel already command 40% and 35% market share of available liberalised spectrum respectively, well above Jio’s 26%, and “refarming of 2G/3G airwaves would further boost their 4G holdings by nearly 62% and 42.5% respectively, which would enable both incumbents to “exponentially expand data capacity at minimum capex”.

To be sure, Jio has more base stations and fiberised cell sites, and "leads in data capacity with a 59% data usage market share," implying its data "throughput is 2.6x and 3.2x higher than Airtel and Voda Idea respectively", the brokerage house added.

At press time, Jio did not respond to ET’s queries.

Experts said the chase for LTE customers by boosting 4G data capacity at minimal incremental costs through spectrum realignment is crucial for both incumbents, given Jio’s ambitions of 500 million 4G users, a scenario that signals relentless pricing aggression from the new telecom market leader.

Analysts said the stakes are bigger for Voda Idea whose customer losses have been much higher than Airtel since the launch of minimum recharge plans last year.

Analysts though expect a sharp improvement in Vodafone Idea and Airtel’s mobile broadband coverage as they will be able to deploy much more spectrum for 4G services, from 56% and 54% now to 84% and 81% respectively, post-refarming.