Ambani brothers’ firms sign spectrum pact; R-Jio okays Rs 15K cr rights issue

The arrangements are subject to liberalisation of RCom spectrum in the 800 MHz band and obtaining requisite approvals.

By: ENS Economic Bureau | Mumbai | Published: January 19, 2016 1:49 am

Mukesh ambanI and Anil Ambani on Monday inked telecom spectrum trading and sharing agreements to bolster Reliance Jio’s indoor coverage and seamless voice services ahead of the commercial launch of the nation’s biggest 4G broadband network. Simultaneously, Reliance Jio, a subsidiary of Reliance Industries run by Mukesh Ambani, also approved a Rs 15,000 crore rights issue to the existing shareholders.

RIL will pump almost the entire rights issue amount as it holds around 99 per cent stake in Reliance Jio. “Reliance Jio and Reliance Communications announced the signing of agreements for change in spectrum allotment in 800 MHz band across 9 Circles from RCom to RJIL, and for sharing of spectrum in 800 MHz band across 17 circles,” the two firms said.

Anil Ambani’s Reliance Communication will trade CDMA grade spectrum in 800 MHz band in 9 service areas where Jio doesn’t have the radiowaves. In 17 circles, the two companies will share spectrum, both the firms said in press statements. As part of the strategic agreement, they also intend to enter into reciprocal intra-circle roaming (ICR) arrangements.

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“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. RCom may get around Rs 4,500 crore by trading its radiowaves to Reliance Jio.

RJio holds 2300 MHz spectrum in all 22 circles which it acquired in 2010. It added 1800 MHz in 18 circles and 800 MHz in 10 circles. The 800 MHz band will allow it to a rollout of 4G-LTE services which offers good coverage indoors and provides seamless voice services through VoLTE.

The deal between RCom and RJio is the second spectrum trading agreement after Idea Cellular’s pact to buy spectrum from Videocon in two circles for Rs 3,310 crore. The subscribers of RCom will be able to access RJio’s LTE network under the reciprocal sharing and ICR agreements.

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