 "Reliance Jio")
Ahead of the commercial launch of Reliance Jio (RJio) services in April, the Ambani brothers on Monday inked the spectrum trading and sharing agreements for 800-850 MHz spectrum, which will give RJio an edge over the competition.
The deal assumes importance as it will give RJio a pan-India 4G network on 800-850 MHz frequency along with 2,300 MHz it already owns. The lower frequency offers better indoor coverage and provides seamless voice services through Voice over LTE (VoLTE). RJio has already soft-launched its 4G services.
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In an official announcement, Anil Ambani’s Reliance Communications (RCom) said it has signed the spectrum trading agreement with Mukesh Ambani’s Reliance Jio Infocomm for 800 MHz licenses in nine circles, which is expected to add Rs 4,000-4,500 crore to RCom’s kitty. RCom will use entire proceeds from spectrum trading to pay the liberalisation fees of about Rs 5,384 crore to the department of telecommunications (DoT) during this week, according to sources.
Both the firms also agreed to spectrum sharing in 800-MHz band across 17 circles. As part of the strategic collaboration, a reciprocal intra-circle roaming (ICR) arrangement will also be signed. RJio holds 2,300 MHz in all circles, 1,800 MHz in 18 circles and 850 MHz in 10 circles. “This will ensure seamless 4G services for the subscribers of RJio once it is launched. RJio is filling all the gaps in its network before the full-fledged rollout,” said a senior analyst.
This is second such deal in this segment after Idea Cellular announced trading of spectrum with Videocon in two circles for Rs 3,310 crore. Last year, the government had approved spectrum sharing and trading between the telecom operators.
In spectrum sharing, operators have to give spectrum usage charges to the government. Post sharing, spectrum usage charges (SUC) rate for the licensees will increase by 0.5 per cent of aggregate gross revenue.
“The spectrum arrangements between Jio and Rcom will result in network synergies, enhanced network capacity and will optimise spectrum utilisation and capex efficiencies. Both operators anticipate considerable savings in operating costs and future investment in networks,” RCom said.
The RCom subscribers will be able to access RJio’s LTE network under the reciprocal sharing and ICR agreements. However, the arrangements are subject to liberalisation of RCom spectrum in the 800-MHz band and obtaining the requisite approvals.
These agreements further strengthen the comprehensive framework of business co-operation between RJio and RCom, following the nationwide long-term indefeasible rights of use agreements for inter-and intra-city optical fibre networks, and for sharing of telecom tower infrastructure, the firm added.
Besides, RCom and another telecom player Sistema Shyam Teleservices (it offers services under MTS brand) have agreed for a merger, which will give the company access to MTS’ liberalised 800 MHz spectrum in eight circles and un-liberalised spectrum in one circle. RCom is also in talks with Aircel for a possible merger of wireless business. Aircel has second generation (2G) spectrum for 19 circles excluding Kolkata, Delhi, Mumbai and Chennai; 3G spectrum for 13 circles, and 4G spectrum for eight circles.
RCom had applied for liberalising its 800-MHz spectrum in 20 circles a few months back. The company, however, is yet to receive any notice for the remaining four circles, where market determined price is not available. In these four circles — Kerala, Karnataka, Rajasthan and Tamil Nadu — DoT has sought telecom regulator Trai’s views on the subject. To liberalise administratively allotted spectrum, telcos need to pay market determined price for the remaining period of the licence. RCom was sitting on Rs 39,800 crore debt at the end of September quarter last year, which it plans to bring down to Rs 20,000 crore after selling off its tower-related infrastructure.
