In a sign of warming in the frosty telecom industry, Mukesh Ambani-backed Reliance Jio Infocomm has entered into a ₹1,037.6-crore spectrum trade with Bharti Airtel.
According to the agreement, Sunil Mittal-backed Bharti Airtel will transfer its 800 MHz spectrum in Andhra Pradesh (3.75 MHz), Delhi (1.25 MHz) and Mumbai (2.50 MHz) to RJio. In addition to the upfront payment of ₹1,037.6 crore, RJio will take over Airtel’s future spectrum liabilities of ₹459 crore. According to market analysts, Airtel has sold the spectrum to RJio at a discount to the price set at the recently concluded auctions.
The deal assumes significance because Mittal and Ambani have been fighting each other since 2001 when Reliance first launched mobile services using the CDMA technology. The two sides have been involved in multiple regulatory disputes over the last 20 years leading to expensive legal battles on issues such as Interconnect Usage Charges, call drops, Adjusted Gross Revenue, spectrum pricing and allegations of preferential treatment by the regulator on certain issues.
The Tuesday deal is a first time for the two rival operators. While Airtel and Vodafone Idea had several partnerships, RJio, as the new player, was in the other corner, till now.
Value from unused spectrum
“The sale of the 800 MHz blocks in these three circles has enabled us to unlock value from spectrum that was unutilised. This is aligned to our overall network strategy,” said Gopal Vittal, Bharti Airtel’s Managing Director and Chief Executive Officer (India and South Asia)d.
Following the deal, RJio’s spectrum footprint will rise to 15 MHz (in the 800 MHz band) in Mumbai circle and 10 MHz in Andhra Pradesh and Delhi circles. For RJio, the contiguous spectrum will help in further improving its services.
According to industry sources, Bharti Airtel will exit the 800 MHz band in these circles, and will continue providing services over the 900 MHz spectrum. This fragmented spectrum came into the company’s fold following the merger with Tata Teleservices in 2019, and has been lying unutilised since then.
RJio, on the other hand, has been consolidating its holding in the 800 Mhz band since it acquired the spectrum from Anil Ambani’s Reliance Communications.
Good call for sector
Industry experts said the deal augurs well for the telecom industry. “It is in the interest of the nation that no national resource should lie idle and all resources including airwaves should be put to maximum use for the benefit of the general public in terms of efficiency and price. This a welcome move,” aid Ravi Sharma, Chairman, Telecom Equipment Manufacturers’ Association of India.
Analysts said that if Airtel and Rjio, the two top players, can bury the hatchet, it will help the industry focus on delivering quality services instead of getting distracted into fighting regulatory and legal battles.
“The industry was reduced to just three private players… resulting in reduced competition when it comes to telecom tariffs, subscriber addition and rolling out new schemes. This was also evident in the recent spectrum auction, with operators renewing expiring spectrum or buying based on necessity. Going forward, we hope to see further such deals,” a sector analyst said.