Indian operators Reliance Communications (RCom) and Reliance Jio have formed a partnership to share and trade spectrum.
Under the terms of the agreement, Jio will acquire 800MHz spectrum from RCom within 9 regions. The two operators will then share bandwidth within this frequency across 17 telecom circles. Subscribers will also be able to roam across the partners’ networks, while the firms have also signed pan-Indian sharing agreements for fibre and tower infrastructure.
Jio is the only operator in the country to have acquired nationwide 4G spectrum, and as such its imminent entry into the 4G market has spurred competition from its rivals. While its originally scheduled 4G launch date has been postponed several times, it has now stated that it will begin its 4G offering by early March.
RCom and Jio are respectively owned by brothers Anil and Mukesh Ambani. The brothers seem to have buried the hatchet following their previous animosity, as the operators were the first in India to sign spectrum sharing and trading deals following a change in India’s regulation which allows the practice.
Only auctioned spectrum may be shared under the new regulations, which therefore obliges RCom to pay the government a market-linked fee for selling its spectrum. The operator did not initially acquire its spectrum via a bidding process, instead buying it at government-mandated prices.
RCom has therefore had to ask the Department of Telecom to liberalise this spectrum across 20 service areas, and has received a bill of almost INR70 billion ($1.05 billion) from the DoT to execute this request in 16 of the telecom circles. Market prices weren’t available in the remaining 4 areas, but the market value of the spectrum in the 16 was placed at INR53.8 billion. The DoT also included a one-time usage fee of INR16 billion.
RCom has 30 days to pay this fee, although whether the charge is legal is currently under debate in various courts. The Kolkata High Court has ruled that RCom does not need a bank guarantee for the charge.
