DoT approves RCom-RJio spectrum deal in 9 circles

By: | Published: April 23, 2016 6:24 AM

Now, both companies will provide 4G services on 10MHz block

The department of telecommunications has approved the spectrum sharing pact between Reliance Jio Infocomm and Reliance Communications. Both the companies will share spectrum across nine circles.The department of telecommunications has approved the spectrum sharing pact between Reliance Jio Infocomm and Reliance Communications. Both the companies will share spectrum across nine circles.

The department of telecommunications has approved the spectrum sharing pact between Reliance Jio Infocomm and Reliance Communications. Both the companies will share spectrum across nine circles.

The approval will enable Reliance Communications, the country’s fourth largest telecom company, to share its spectrum in the 800Mhz band with Reliance Jio in Mumbai, Uttar Pradesh-East, Madhya Pradesh, Haryana, West Bengal, Odisha, Himachal Pradesh, Assam and North-East circles, Reliance Communications said in a regulatory filing to the Bombay Stock Exchange.

The approval came on a proposal by the two companies after they had entered into an agreement in January this year to share and trade spectrum in the 800 Mhz frequency across 17 circles, including an agreement wherein Reliance Jio would acquire about 33.75 MHz in nine of those circles by paying about Rs 4,500 crore.

Reliance Jio 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, RJio has acquired spectrum from RCom in circles where it doesn’t own any. Following the deal, it will have 5 MHz spectrum in each circle through trades plus more via the sharing pact.

The telecom department’s approval would now allow Reliance Communications and Reliance Jio to provide 4G services on 10MHz block, which would enable the companies to provide internet speeds of up to 80 Gigabits per second and at much lesser cost than its competitors.

At the time of signing the pact in January, sources said that Reliance Communications will use the proceeds of Rs 4,500 crore to partially trim its total debt of Rs 35,254 crore. The Mumbai-based company needs to cut its debt before a proposed 3-way merger of itself with Sistema Shyam Teleservices and Aircel, which it is currently pursuing.

During the last fiscal through March 2015, Reliance Communications’ net profit declined 32% from a year earlier to Rs 714 crore, hurt by its high interest payments for the loans it had taken. While it reported a net loss of R705 crore at the standalone level in the July-September quarter, the consolidated profit for the period at R156 crore remained flat compared with the previous year.

Win-win for both firms

* The approval came on a proposal by the two companies after they had entered into an agreement in January this year to share and trade spectrum in the 800 Mhz frequency across 17 circles

* RJio currently has 800 MHz spectrum in 10 circles. Barring UP (East), where it has 3.75 MHz, RJio has acquired spectrum from RCom in circles where it doesn’t own any

* Now, RCom and RJio to provide 4G services on 10MHz block, which would enable the companies to provide internet speed of up to 80 Gigabits per second and at much lesser cost than its competitors

* RCom will use the proceeds of R4,500 crore to partially trim its total debt of R35,254 crore

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