NEW DELHI: Bharti Airtel has acquired Tikona Digital’s 4G airwaves for Rs 1,600 crore, ramping up its high-speed broadband spectrum capacity to take on Reliance Jio Infocomm and the Vodafone-Idea Cellular combine in a fiercely competitive market which is seeing rapid consolidation.The deal, announced a few days after Vodafone and Idea said they were merging their businesses to create a company that will replace Bharti Airtel as India’s largest telco, gives the Sunil Mittal-led company access to Tikona’s 4G airwaves in five circles — Gujarat, UP (East), UP (West), Himachal Pradesh, and Rajasthan.It will also narrow the gap between Bharti’s pan-India 4G spectrum capacity and Vodafone-Idea’s and Reliance Jio’s, although the difference will still be significant.Rajesh Tiwari, one of the cofounders of Tikona, though sought to put a spanner in the deal, slapping a legal notice against both the companies for not providing details of how the proceeds will be split among shareholders. He has said the deal should not go ahead until there was clarity about his entitlements and his interests were protected. Tiwari owns just over 1 per cent in the Mumbai-based Internet services provider.Bharti Airtel had bagged 4G airwaves in only four of the 22 circles in the 2010 auctions.Bharti Airtel has subsequently followed a strategy of buying out companies with 4G spectrum and this is the fifth such acquisition since 2015. It had acquired more airwaves in the 4G auctions that took place last year. Airtel is engaged in a fierce battle with Reliance Jio, which has disrupted both the voice and data markets with rock bottom rates, and it now also has to reckon with a united Vodafone-Idea combine.Spectrum capacity is critical for quality of service to cater to an increasingly data-hungry subscriber base and can be the difference between losing, retaining or acquiring new users in an intensely competitive market.“We believe that combining our capacities in TD-LTE (2300 MHz) and FD-LTE (1800 MHz) will further bolster our network, and help us provide unmatched high-speed wireless broadband experience to our customers,” Gopal Vittal, MD (India and South Asia), Bharti Airtel, said in a statement.The Tikona deal, which includes taking on debt of Rs 500-600 crore, will see Airtel net 100 MHz of 4G spectrum in the 2300 MHz (4G) band equally split across the five circles, taking its total 4G holding to close to 880 MHz (including Telenor India), compared with 1,169 MHz for Jio and 1,089 MHz for the Vodafone-Idea combine. It will also get 350 cell sites in those five circles but won’t take on any employees of Tikona.“Airtel’s acquisition of Tikona’s 4G spectrum fills the gap that it had in the TD-LTE (2300 MHz) band mainly in UP (East), UP (West) and Rajasthan circles, and adds capacity to provide highspeed data services while also securing a pan-India footprint in the 2300 MHz band,” said Rishi Tejpal, principal research analyst at Gartner.The company plans to roll out high-speed 4G services on the newly acquired spectrum immediately after the deal is closed in the next four to six weeks, said Airtel officials.Apart from increasing spectrum capacity, Bharti Airtel’s weighted average spectrum usage charges (SUC) will also reduce because Tikona’s SUC is at 1 per cent of adjusted gross revenue (AGR), said Naveen Kulkarni, co-head of research at brokerage PhillipCapital.“Bharti currently pays SUC of around 4.3 per cent of AGR. With the acquisition of Tikona’s spectrum, Bharti’s SUC is likely to reduce by 25 basis points, translating into an annual savings rate of Rs 100 crore. Considering the significant enhancement of data footprint and SUC savings (NPV of Rs 1,000 crore), we find the acquisition adds significant value to Airtel,” said Kulkarni.The combined spectrum holding of Airtel in these five circles won’t breach any spectrum holding limits and the company won’t have to pay any additional market price to the government for the spectrum as it was bought by Tikona in the 2010 auctions for Rs 1,058 crore.Tikona was founded in 2008 by former Reliance Communications executives Rajesh Tiwari and Prakash Bajpai. Its other investors include Goldman Sachs, Oak Capital, IFC and Everstone Capital. The company will retain its home broadband wireless business.Tiwari, who left the company in 2009, holds a direct 1 per cent stake in Tikona. He is also a shareholder of Tikona Trust, which in turns owns a stake in the company. He told ET that he was taking legal action as he had not been provided information regarding the split of the share proceeds from the sale to Airtel.