Bharti Airtel’s plan to acquire 4G spectrum in six service areas will allow it to expand LTE services to 19 regions compared with mobile newcomer Reliance Jio’s 22, which is nationwide coverage.

Meanwhile operators Vodafone and Idea Cellular have 4G spectrum in five and 12 regions, respectively.

The market leader announced yesterday it will spend INR44.3 billion ($659 million) to buy 10MHz of 1.8GHz spectrum from smaller rival Videocon in six regions. The spectrum is contiguous to Airtel’s existing spectrum in the 1.8GHz band.

Airtel will fund the acquisition from the sale of operations in Burkina Faso and Sierra Leone to France’s Orange, Fitch Ratings said.

The deal comes amid rapid growth in data services in India, as usage is doubling annually, while data ARPU has jumped to more than INR200 per month, compared with voice ARPU of INR137.

The top-four Indian operators have been keen to acquire spectrum from smaller unprofitable firms since last September, when the regulator allowed spectrum trading among operators.

Fitch said Airtel’s acquisition price of INR44 billion is about 65 per cent higher than the regulatory auction reserve price, after adjusting for the residual life of 16 years.

The rating agency maintains a negative outlook on the Indian telecoms sector this year as it expects the credit profiles of the top-four players to come under pressure from tougher competition with the entry of Jio, larger capex requirements and debt-funded M&A.

The industry blended tariff should fall 5-6 per cent as Jio’s entry will curb the rise in data ARPU despite rising data usage, and as voice ARPU will continue to fall due to data cannibalisation, Fitch said. The top-four players’ average operating EBITDA margin will narrow by 1-2 per cent (last year it was 35 per cent) due to pricing pressure on the higher-margin data services and a rise in marketing spend as data competition rises.