Videocon to join 4G club in second half of 2013

Bharti Airtel, Reliance Infotel and Aircel will now have company in the long-term evolution (LTE) 4G services space. But with a difference. While these companies' 4G services are in the 2,300 Mhz band, the new entrant, Videocon Telecommunications, will offer LTE 4G services in the 1,800 MHz band from the second half of 2013.

4G LTE services offer internet at speeds many times more faster than in 3G.

Videocon will launch 4G services in all the six circles in which it recently bought 1,800 MHz spectrum for Rs 2,221 crore (Rs 22.21 billion).

The 1,800 MHz band has till now been used by operators to offer 2G services only. However, under the rules of the recently concluded auction, operators have been given "liberalised spectrum", which means that they can use it to offer any service - 2G, 3G or 4G.

Consumer electronics to oil and gas company Videocon will be the first off the block to use the 1,800 MHz band for services other than 2G. Currently, only Airtel has launched 4G services in a few cities such as Kolkata and Bangalore.

Speaking to Business Standard, Arvind Bali, CEO of Videocon Telecommunications, said: "We would reserve one carrier of 1.25 MHz for 4G LTE out of the total 5MHz of spectrum that we have won. Our aim is start with dongles and offer subscribers high speed internet. Then after some years, we will also launch mobile services. The rest of the spectrum will be used for normal voice services."

Bali added that the move will help improve the overall average revenue per user (Arpu) for the company as data users generally spend more for high-speed access. Also, the 1,800 MHz band is considered more efficient to offer 4G services than the 2,300 MHz band.

However, analysts say that Videocon will be constrained by the fact that operators in the 2,300 MHz band have won 20 MHz of spectrum each, which more than compensates for the better efficiencies in the 1,800 MHz band.

Videocon is still working out the additional investment that it would require to upgrade the network for 4G, which the company had already built, said Bali.

Videocon has bought spectrum for six circles in Bihar, Haryana, Gujarat, Madhya Pradesh, Uttar Pradesh East and Uttar Pradesh West.

The company continues to operate in Punjab. Earlier, it had spectrum for 21 of the 22 telecom circles in the country in 2008, but that spectrum sale has been annulled by the Supreme Court.

The company has a subscriber base of 4.39 million according to the Cellular Operators Association of India's October data, which constitutes 0.65 per cent of the GSM subscriber base.