The Telecom Commission on Friday allowed operators wanting to liberalise their 800 MHz spectrum in circles where auctions were not held in 2015 by paying the reserve price proposed by the Telecom Regulatory Authority of India (Trai) for the upcoming auction, with the condition the telco pays the final winning price after the auction.
This benefits Reliance Communications — which has already liberalised its 800 MHz spectrum in 17 circles by paying Rs 5,384 crore — as it enables it to do so in the remaining four circles.
As a result, the company can extend its spectrum sharing and trading pact with Mukesh Ambani’s Reliance Jio on a pan-India basis. The two companies had on January 18 entered into a pact to share and trade spectrum in the 800 MHz band across 17 circles. Apart from the sharing, Jio is to acquire 33.75 MHz of spectrum from RCom across nine of these circles.
The four circles concerned are Kerala, Karnataka, Rajasthan and Tamil Nadu. Based on the reserve price, RCom’s outgo comes to around Rs 5,193 crore but since it needs to pay only for the balance period of the validity of its licence (2021) after making some adjustment in lieu of the entry fee paid, the final amount comes to Rs 1,290 crore.
With this go-ahead by the TC, both RCom and RJio can now offer 4G LTE services across the country.
To liberalise administratively allotted spectrum, telcos need to pay a market-determined price for the remaining period of their licence.
RJio currently has 800 MHz spectrum in 10 circles (5 MHz in nine and 3.75 MHz in one). Barring Uttar Pradesh (East) where it has 3.75 MHz, it has acquired spectrum from RCom in circles where it doesn’t have it. After the deal it will have 5 MHz spectrum in each circle through the trade deal plus more through the sharing pact. Similarly, post the sharing and trading deal with RJio, RCom will be left with 1.25 MHz of spectrum.
This will ensure that the company enters into intra-circle roaming pacts with RJio whereby it can provide 4G services to its subscribers across the circles. This also explains why even in circles where RCom has 5 MHz of spectrum, RJio has acquired only 3.75 MHz and entered into sharing deals for the balance 1.25 MHz. An intra-circle roaming pact can only be signed if both the operators have spectrum in the same band.